The Ofgem energy price cap October increase will push the average annual dual-fuel bill to £1,723, a rise of £60 a year or £5 a month, landing just as colder weather sets in and household budgets come under renewed pressure.
The 4% increase, driven by higher wholesale gas costs, takes bills to their highest level in three years. Around 22 million households in England, Wales and Scotland on variable tariffs will feel the change directly. A further 11 million, or roughly 35% of billpayers, are on fixed deals and will see no immediate change.
What is behind the price rise?
Wholesale gas costs, which account for just over a third of a typical dual-fuel bill, have been pushing prices up. The average price of gas has been 61% higher over the past three months compared to late 2025, according to Energy UK, the suppliers’ trade body. Broader market uncertainty, including the impact of the US-Israeli conflict with Iran, has led millions of households to lock into fixed tariffs in recent months.
Ofgem sets a cap on the price charged per unit of gas and electricity, not on the total bill itself. How much any household pays ultimately depends on how much energy it uses. In July, Ofgem revised downwards its estimate of typical energy consumption, citing households cutting back in response to years of elevated prices and improvements in energy efficiency. Its updated figures put typical annual use at 9,500 kWh of gas and 2,500 kWh of electricity.
Ofgem’s director general for markets, Neil Kenward, pointed out that while gas bills are rising by 8%, electricity bills are actually falling slightly as a result of the government’s VAT cut. ‘So we are now seeing for the second price cap in a row a bit of a gap open up between gas bills and electricity bills, and that in a sense is positive because it means the transition for example to heat pumps becomes cheaper for households,’ he told BBC’s Today programme. Kenward also said fixed tariffs were currently available at £100 or more below the October price cap level.
To illustrate how the cap methodology affects comparisons: according to Ofgem, had the old 2023 typical domestic consumption values been used, the price cap would have stood at £1,862 now, rising to £1,935 from October under those older assumptions.
Ofgem energy price cap October: the government’s response and what lies ahead
Energy Secretary Miatta Fahnbulleh described the government’s decision to remove VAT on energy bills for six months from October as a ‘down payment’ on helping households. She said the measure would leave bills £45 lower than they would otherwise have been, and that the warm homes discount would take £150 off bills for six million households this winter. ‘We know people are under huge amounts of pressure due to the cost of living, and I know that people are really worried about their energy bills, and we are absolutely alongside them and trying to do everything we can,’ she said.
Opposition parties were unconvinced. Shadow energy secretary Claire Coutinho said: ‘Labour promised to cut energy bills by £300, but they have gone up by nearly £400 instead.’ Liberal Democrat spokesperson Pippa Heylings called on the prime minister to ‘wake up to the scale of the challenge and accept that bold change is needed to bring bills down.’
Former Prime Minister Gordon Brown also entered the debate, arguing the government should introduce a ‘machine gaming tax’ and use the proceeds to support those struggling with bills. He also said ministers should consider a long-term social tariff for energy.
Looking further ahead, analysts at Cornwall Insight have forecast that domestic energy prices may rise a further 9% in the new year. Sainsbury’s Energy has put a figure on what that might mean, predicting the January 2027 price cap will increase to £1,855, a rise of £130 from the October 2026 level.
Debt piling up as bills stay high
The prolonged period of elevated energy costs is leaving a trail of unpaid bills. Energy UK estimates that total energy debt has collectively risen to £6 billion, with expectations it could reach about £7 billion by the end of the year. The average billpayer in debt without a payment plan owes £3,500, according to the trade body, which has called for a flexible discounted tariff for those most in need, funded through taxation.
Vanessa Northam, director at debt charity StepChange, said that people coming to the charity for help increasingly carried high energy debt, averaging £2,600 on top of other financial commitments. ‘Increasingly, we are seeing people have to use credit to afford life’s essentials. It is storing up problems further down the road,’ she said. StepChange has joined calls for a social tariff.
Ofgem also noted that prepayment customers paying the lowest price cap rates could save an average of about £45 compared with those paying by direct debit, a detail the regulator highlighted alongside encouragement for struggling households to contact their supplier directly, as companies can often only help once they know a customer is unable to pay.
