Ofgem announced the October to December 2025 Default Tariff Cap at £1,755 a year for a typical dual fuel consumer, a 2% increase from the July cap of £1,7201. The cap limits what suppliers can charge on default, or standard variable, tariffs, and the figure is based on Ofgem's Typical Domestic Consumption Values of 2,700 kWh of electricity and 11,500 kWh of gas a year1.
Cornwall Insight attributes part of the rise to the expansion of the Warm Homes Discount, which gives 2.7 million extra households a £150 reduction in their bills, alongside changes to network charges and to the structure and components of the underlying cap models1. Its forecast for the January to March 2026 cap is £1,712.20 a year, made up of a baseline forecast of £1,702.75 and a Nuclear RAB element of £9.451. The same forecast puts per unit costs, before the nuclear levy, at 26.22p per kWh for electricity with a standing charge of 0.54 pounds a day, and 5.92p per kWh for gas with a standing charge of 0.32 pounds a day1.
The Regulated Asset Base is a mechanism for funding new nuclear power stations by spreading construction costs over around 10 years and operation costs over around 35 years across consumer bills, and it is expected to add just under £10 a year to a typical bill1. Cornwall Insight says the costs have started to be paid out but have not yet been factored into bills, and it expects Ofgem to consult on including the charge in the cap formula, with the levy reviewed on a three-year cycle1.
"The rise in bills, however small it may look on paper, will feel very real for households as we head into the colder months. The rise in costs is in part due to the widely supported expansion of the Warm Home Discount. This will be a lifeline for many of the 2.7 million additional households now eligible for support, but for those still facing high bills, it will offer little comfort. The reality is, when we give more help to those who need it most, we all end up sharing the cost."
Why it matters for households
The cap is not a ceiling on any individual bill. It sets the maximum a supplier can charge for each unit of gas and electricity and for the daily standing charge on a default tariff, so a home using more than the typical 2,700 kWh of electricity and 11,500 kWh of gas will pay more than £1,755, and one using less will pay less1. The 2% rise applies to households that have not switched to a fixed deal and remain on their supplier's default tariff.
For energy independence at home, the direction of the non-wholesale parts of the bill is the point to watch. The Warm Homes Discount expansion and the coming nuclear levy are policy costs added to unit rates and standing charges rather than to wholesale energy, and Cornwall Insight notes that rising policy costs are keeping bills higher even as wholesale prices are forecast to fall1. That means the share of a household bill that a home can reduce through its own consumption, by using less or shifting use, is smaller than the wholesale element alone would suggest.
What happens next
Cornwall Insight forecasts the January to March 2026 cap at £1,712.20 a year for a typical household, driven by an expected fall in wholesale prices1. It expects the nuclear RAB charge to be incorporated into the cap from January, alongside an adjustment covering the final two months of 2025, and expects Ofgem to consult on how to include it in the cap formula within the coming months1. The levy will be reviewed on a three-year cycle1.
Sources1 cited
- October Price Cap to Rise but January Brings Hope of a Cut in Bills - Cornwall Insight, cornwall-insight.com