The period in which Ofgem tracks the market to set the next energy price cap closed on 19 August 2026, according to Uswitch. The cap itself will be announced by 26 August1. It will be the fourth and final cap to take effect in 2026, running from 1 October to 31 December1.
Suppliers are predicting a relatively small increase of about 3.7%1. Uswitch reports that the oil and gas supply issues behind the 13% rise in the previous cap have not been solved, and that the Strait of Hormuz has not been reopened despite peace talks taking place1. It states that this continued disruption almost certainly means the cap will increase again1. The exact level has not been reported.
A government VAT cut on electricity bills takes effect on 1 October1. Uswitch puts its value at an average of £45 per year and says it will slightly mitigate the impact of the probable cap rise, though its impact could be smaller than hoped1.
The cap applies to customers on standard variable tariffs. Households on a fixed tariff have costs that are fixed and do not change when the cap changes1. Prepayment meter customers who have not fixed their tariff fall under the prepayment price cap, which Uswitch says works the same way as the regular cap1. The price cap does not apply in Northern Ireland, where a separate market operates.
"The observation window (the period when Ofgem tracks the market to set the price cap) closed on 19 August."
Why it matters for households
The cap sets the maximum a supplier can charge per unit of gas and electricity, and the standing charge, for households on a default or standard variable tariff. A rise of about 3.7% would raise the cost of each unit used, so a home's bill depends on how much energy it consumes. The VAT cut on electricity applies from the same date as the new cap, so the two changes land together and partly offset each other.
For a household's energy independence, the practical point is exposure. A fixed tariff removes exposure to this cap change for its duration; a standard variable tariff carries it. Prepayment customers who have not fixed are exposed in the same way as credit customers. The cap level also shapes what fixed deals are available, since suppliers price them against expected cap levels. Uswitch notes that savings are currently available on fixed deals and that the cap is probable to stay high over the winter1.
What happens next
Ofgem will announce the October to December 2026 cap by 26 August1. The new level and the VAT cut on electricity both take effect on 1 October, and the cap then runs to 31 December1.