What does the price cap rise mean for my bills?
Jason Hawthorne, CEO at ESME
Rates checked October 2026 · 5 min read · Last updated 22 October 2026
In short
From 1 October to 31 December 2026, the price cap puts a typical bill at £1,723 a year, up 4% from £1,663. Electricity has no VAT until 31 March 2027, so the unit rate is 26.32p and the standing charge 54.83p a day. The cap limits your unit rate and standing charge, not your total bill.
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Key facts
Electricity unit rate
26.32p a unit, no VAT
Electricity standing charge
54.83p a day
Gas
7.97p a unit and 29.68p a day, with 5% VAT
Typical bill
£1,723 a year, up from £1,663
Next cap
Announced 25 November 2026, from 1 January 2027
What is the price cap?
Ofgem sets the most a supplier can charge for each unit of energy and for the daily standing charge on a standard variable tariff. It changes every three months. It does not cap your total bill, so if you use more, you pay more.
From July 2026 Ofgem also changed the usage it assumes for a typical home, to 2,500 units of electricity and 9,500 of gas a year. That is why typical bills from before then are not directly comparable.
What changed on 1 October?
Electricity unit rate
July to September 2026
26.11p, with 5% VAT
October to December 2026
26.32p, no VAT
Electricity standing charge
July to September 2026
57.19p a day
October to December 2026
54.83p a day
Gas unit rate
July to September 2026
7.33p
October to December 2026
7.97p
Typical dual fuel bill
July to September 2026
£1,663 a year
October to December 2026
£1,723 a year
Direct debit, standard variable tariff. Ofgem says the cap would have been about £45 a year higher without the VAT cut on electricity.
What happens in January?
Ofgem announces the next cap on 25 November 2026, for January to March 2027. Cornwall Insight forecasts a typical bill of about £1,999, a rise of about 16%. That is a forecast, not a decision.
What does it mean for solar and batteries?
Solar and batteries save money by avoiding units at the price cap rate. When that rate rises and cheap overnight rates stay low, each unit saved is worth more, so payback gets shorter. See will a battery pay back.
Questions people also ask
Why is there no VAT on electricity?
VAT on electricity has been removed from 1 October 2026 to 31 March 2027. Gas still has 5% VAT.
Should I fix my tariff?
A fix protects you from rises but not from falls, and may have exit fees. Compare the fixed rates against the expected cap.
Does the cap apply to time of use tariffs?
No. The cap applies to standard variable tariffs. Time of use and fixed tariffs set their own prices.
Sources
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Figures are for Great Britain and were checked on the date above. Prices change, so check the latest before you decide. This is general information, not financial advice.
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