UPDATED: 1 SEPTEMBER 2026
Ofgem confirmed it on 26 August: from 1 October the price cap rises 4% to £1,723 a year for a typical household — about £5 a month more. But almost all of that is gas. If you heat with electricity, your bill barely moves. Here is what actually changes, and what is worth doing in the four weeks before it lands.
Switch to Octopus — Get £50 Credit →On 26 August 2026 Ofgem published the price cap for 1 October to 31 December 2026. For a typical household paying by Direct Debit for both gas and electricity, the cap rises from £1,663 to £1,723 a year — up £60 a year, or roughly £5 a month.
The cap protects around 22 million households on default tariffs. Around 35% of households — about 11 million — are already on fixed tariffs and will not see this rise at all until their deal ends.
| How you pay | From 1 October 2026 | Change |
|---|---|---|
| Direct Debit (typical dual fuel) | £1,723/yr | +£60/yr (+3.6%) |
| On receipt of bill | £1,861/yr | +4% |
| Prepayment | £1,678/yr | +4% — still the cheapest cap rates |
This is the part that will confuse people, and most coverage skips it. If you remember the July cap being £1,850, a new cap of £1,723 looks like a fall. It is not.
In July 2026 Ofgem changed the yardstick. The Typical Domestic Consumption Values — the assumed usage of a “typical” household — were reduced, because households now use around 7% less electricity and 17% less gas than at the last review, thanks to better efficiency, warmer weather and people cutting back as prices rose.
| Measured on | Now (Jul–Sep) | From 1 October |
|---|---|---|
| Updated TDCV (what Ofgem now quotes) | £1,663/yr | £1,723/yr |
| Old 2023 TDCV (the basis for the old £1,850 figure) | £1,862/yr | £1,935/yr |
This matters far more than the headline, because it decides whether you need to do anything at all. The increase is being driven by wholesale gas — up 11% over the past three months, on the back of the ongoing conflict in the Middle East. Electricity is close to flat, because the Government has removed VAT from domestic electricity bills from 1 October.
| Component | Change from 1 October |
|---|---|
| Gas unit rate | ↑ about 8.7% |
| Gas standing charge | ↑ about 2.2% |
| Electricity unit rate | ↑ about 0.8% |
| Electricity standing charge | ↓ about 4.1% |
So: a gas-heated home sees roughly an 8% jump in its gas costs. A home with no gas at all — heat pump, electric heating, all-electric flat — sees a rise of less than 1%. Ofgem reckons the VAT removal saved about £45 a year off what the cap would otherwise have been, and it applies to people already on fixed deals too, automatically.
Worth keeping in perspective: the cap is still 52% below the 2022 crisis peak, when the government stepped in at £2,500. Adjusted for inflation it is about 7% above the same period in 2025.
Honest answer: it depends on whether you burn gas, and the current fixed deals are not as compelling as they were a year ago.
As of 26 August 2026, the Octopus 12-month fixed tariff sat at £1,699/yr — about £24 below the October cap. That is protection rather than a bargain. Ofgem itself noted that fixes were available at £100 or more below the October cap elsewhere in the market, so if your only goal is the lowest possible price, compare before you commit. Octopus also charges a £50 exit fee per fuel if you leave a fix early, which is £100 on a dual-fuel account.
What a fix genuinely buys you is certainty through winter — the quarter where you use the most gas, and ahead of a January cap that has not been set yet. Ofgem announces that in late November, and the electricity VAT removal currently runs only to 31 March 2027.
| Your situation | What I’d actually do |
|---|---|
| Gas central heating, want certainty | A fix is worth looking at — you are the household this rise actually hits. Compare Octopus’s fix against the wider market first; £24 below the cap is thin. |
| All-electric home (no gas) | Do very little. Your bill moves less than 1% in October. Fixing to dodge a rise you are not getting makes no sense. |
| EV owner | Get on Intelligent Octopus Go — 8p/kWh overnight beats any fixed deal on total cost, and it is unaffected by the gas rise. |
| Heat pump owner | Cosy Octopus — three cheap windows a day, and again no gas exposure. |
| Already on a fixed tariff | Nothing. You are one of the 11 million households this does not touch until your deal ends — and the VAT cut is applied to your bill automatically. |
| Not with Octopus yet | Switch on any tariff to claim the £50 referral credit, then pick fixed or flexible once you are on the account. The credit is the same either way. |
For what it is worth, Octopus themselves are not pushing people either way on this — their own guidance frames it as certainty versus wait-and-see. Their Flexible Octopus variable tariff has been priced below Ofgem’s cap every day since the cap began, and Tracker and Agile follow wholesale prices rather than the cap at all.
Switch to Octopus — Get £50 Credit →Until August, this page carried a forecast of around £1,899 for October, based on analyst projections from May. The confirmed figure came in well below that, for two reasons that nobody had priced in back in the spring: the Government’s VAT removal on electricity, and the TDCV rebasing explained above.
Worth remembering the next time you see a confident price cap prediction — including on this site. Forecasts made three months out move a long way.
The £50 credit will not solve rising bills, and I am not going to pretend otherwise. But the October rise costs a typical household about £5 a month — so £50 covers roughly ten months of it.
To claim: switch through the referral link, which takes about five minutes, and the credit lands after your first Direct Debit. No code to type. The person who shared the link gets £50 too. Business and charity accounts get £75 each instead.
Switch to Octopus — Get £50 Before 1 October →£1,723 a year for a typical dual-fuel household paying by Direct Debit, from 1 October to 31 December 2026. Confirmed by Ofgem on 26 August 2026. That is £60 a year more than the current £1,663 — about £5 a month. Pay on receipt of a bill and it is £1,861; prepayment is £1,678.
Because Ofgem changed how it defines a typical household in July 2026, reducing the Typical Domestic Consumption Values to reflect households using around 7% less electricity and 17% less gas. On the new basis the cap goes £1,663 → £1,723. On the old 2023 basis the same change reads £1,862 → £1,935. Bills rise either way — only the yardstick moved.
Overwhelmingly gas. Gas unit rates rise about 8.7% and gas standing charges about 2.2%, while electricity unit rates rise about 0.8% and electricity standing charges actually fall about 4.1%. The Government removing VAT from domestic electricity is what holds the electricity side flat. Homes with no gas see under 1%.
If you heat with gas, it is worth considering — that is where the whole increase lands, and a fix also covers you for the January cap, which is not set until late November. If you are all-electric, there is much less to protect against. Note that Octopus’s fix was £1,699/yr as at 26 August, only about £24 under the cap, while Ofgem said fixes at £100+ below the cap were available elsewhere — so shop around. Octopus exit fees are £50 per fuel. See our fixed vs flexible guide.
Unknown. Ofgem announces the January–March 2027 cap in late November 2026. Wholesale gas rose 11% in the three months to August, which is what caused this rise, and the VAT removal on electricity is currently legislated only to 31 March 2027 — so that is worth watching.
No. Your rates are locked until your deal ends, and you are among the roughly 11 million households the October rise does not touch. You still benefit from the electricity VAT removal, which suppliers apply automatically.
Partly. £50 covers roughly ten months of the October increase for a typical household. It is a genuine offset rather than a fix for rising bills, and you get it on any tariff — switch via share.octopus.energy/brave-kiwi-22 and it lands after your first Direct Debit. Business and charity accounts get £75 each.