Ofgem announced on Wednesday 27 August 2025 that the energy price cap will rise by 2% for the period covering October to December 20251. For a typical household paying by Direct Debit for gas and electricity, the annual bill will be £1,755, up from £1,720 in the previous quarter, an increase of £35 or £2.93 a month2. Ofgem said the new level is £625 (26.3%) lower than the height of the energy crisis at the start of 2023, when the government implemented the Energy Price Guarantee1.
The cap sets a maximum rate per unit and standing charge for default tariffs. Under the new rates, a household on a standard variable tariff paying by Direct Debit will pay on average 26.35 pence per kilowatt hour for electricity, with a daily standing charge of 53.68 pence, and 6.29 pence per kWh for gas, with a daily standing charge of 34.03 pence2. Standing charges rise by 4% for electricity and 14% for gas, adding a total of 7p per day, which Ofgem attributes primarily to the government's expansion of the Warm Home Discount1.
The cap level differs by payment method. Ofgem's summary shows all three main methods rising by £35, with prepayment remaining the cheapest and standard credit the most expensive3.
| Payment method | July to September 2025 | October to December 2025 | Change |
|---|---|---|---|
| Direct Debit | £1,720 | £1,755 | £35 (2%) |
| Standard credit | £1,855 | £1,890 | £35 (2%) |
| Prepayment meter | £1,672 | £1,707 | £35 (2%) |
| Economy 7 (Direct Debit) | £1,145 | £1,179 | £34 (3%) |
Ofgem said the rise is driven by an increase in electricity balancing costs, adding around £1.23 a month, and costs associated with the extension of the Warm Home Discount, at £1.42 a month, alongside adjustments to gas network costs of 72p a month1. Wholesale prices are currently stable and have fallen by 2% over the past three months1. Energy UK noted that the cap remains more than a third (37%) above pre-crisis levels, and that the Warm Home Discount expansion brings the total to an estimated 6.1 million households in receipt of the support4.
"While today's change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though, consider a fixed tariff as this could save more than £200 against the new cap."
Ofgem said more than a third of customers (37%) are now on fixed tariffs, and that around 34 million domestic customer accounts remain on standard variable tariffs, of which around 20 million are Direct Debit, 8 million standard credit and 6 million prepayment1. It said 8 million customers pay by standard credit but could be making savings of £135.60 by switching payment method1.
Why it matters for households
The cap is a limit on unit rates and standing charges, not a cap on the total bill, so what a household pays depends on how much energy it uses, where it lives and its meter type2. A rise in the standing charge affects every connected household regardless of consumption, which matters for low-use homes. The gap between payment methods is also material: standard credit customers pay an additional £136 a year compared with Direct Debit, while prepayment customers pay £48 less than Direct Debit3. For a home's energy independence, the cap level matters less than the split between fixed and variable exposure. Ofgem's own figures show around 20 million accounts on fixed tariffs, which shield those households from this rise1. The regulator attributes part of the increase to policy and network costs rather than wholesale energy, and Energy UK said non-wholesale costs are likely to keep increasing4.
What happens next
Ofgem said the levels for 1 January 2026 to 31 March 2026 will be published by 25 November 20252. It also opened a policy consultation package on 27 August covering the Nuclear Regulated Asset Base, the proposed extension of the ban on acquisition-only tariffs, and a review of the benchmark consumption figure used to set the cap1. Energy UK said the Warm Home Discount scheme is scheduled to end in March 2026, though the cost of the increased discount will be spread over the four price caps covering October 2025 to September 20264.
Sources4 cited
- Energy price cap will rise by 2% from October | Ofgem, ofgem.gov.uk
- Changes to energy price cap between 1 October and 31 December 2025 | Ofgem, ofgem.gov.uk
- Summary of changes to energy price cap 1 July to 30 September 2025, ofgem.gov.uk
- Energy UK Explains: October 2025 price cap - Energy UK, energy-uk.org.uk