The UK energy price cap announcement points to a 4% rise from October, with typical household energy bills across Great Britain forecast to reach £1,729 a year. Craig Lowrey of Cornwall Insight said the change is expected to leave struggling households under pressure as winter approaches.
Ofgem is due to set the cap next Wednesday. Its calculation limits what suppliers can charge for each unit of gas and electricity, based on the cost of supplying homes, so the October figure will set the pace for bills through the last three months of 2026.
Cornwall Insight forecast
Cornwall Insight said the quarterly cap would be the highest since July 2023. The analysts estimated electricity rates for direct debit customers will rise from 26.11p a kilowatt hour to 26.57p, while gas charges will move from 7.33p to 7.90p.
The forecast also shows a different path under the previous methodology, which would have put the cap at £1,940.69 from October. On the regulator’s new calculations, the equivalent annual dual fuel bill for the typical UK household is £1,729.
Craig Lowrey on winter bills
Lowrey said, "Rising energy bills aren’t welcome at the best of times, but with winter approaching, this latest hike will hit struggling households especially hard." He also said, "It is a stark reminder that our energy bills remain tied to events thousands of miles away. Moments like this are the strongest argument for reducing Britain’s reliance on volatile international gas."
His comments point to the practical problem for households entering the colder months: a price cap rise arrives just as heating demand grows. The impact will not fall evenly, because the annual figure only gives the typical bill, while actual costs still depend on how much gas and electricity a household uses.
VAT cut and gas costs
The forecast increase comes as the new prime minister’s VAT cut from October is due to trim household electricity bills by an average of £45 a year. Craig Lowrey said temporary relief like VAT cuts helps soften the blow, but it does not change the underlying reliance on imported natural gas.
That leaves the higher cost of gas more than cancelling the tax cut’s effect. Cornwall Insight expects bills to rise again in January on current market prices, after energy market prices moved higher because of the Middle East war and the increased use of expensive gas in power plants during heatwaves across Europe.
Jess Ralston on gas dependence
Jess Ralston of the Energy and Climate Intelligence Unit said, "To many households this will feel like a horrible reminder of the first gas crisis after Russia invaded Ukraine." She added that wholesale gas prices have reached a near four-year high, which is likely to drive further increases in future bills.
Ralston also said the UK’s reliance on gas for home heating was "a particular concern as although electric heat pump sales are on the up, we still lag behind European neighbours going further and faster to reduce gas dependence." For households, the immediate question is not whether the October cap moves up, but how much more room the winter bill leaves after energy use is added on top of the new rate.
