Energy Price Cap October 2026: Forecast, Date and VAT Cut Impact

Ofgem will confirm the energy price cap for October 2026 by Wednesday 26 August, and every serious forecaster expects it to rise. Cornwall Insight, whose projections are the industry benchmark, predicts an increase of around 2% to roughly £1,700 a year for a typical household. That figure already includes the new 5% electricity VAT cut, worth about £45, which takes effect on 1 October.

Two different annual numbers are circulating for the same forecast: £1,699.58 and £1,906.27. Neither is wrong. Ofgem changed its definition of a "typical household" on 1 July, and the headline cap figure depends entirely on which yardstick is used. Much of the consumer coverage has not caught up, which is why the same October forecast can look £200 cheaper on one website than another.

The stakes are considerable. Around 33 million domestic energy accounts in Great Britain sit on standard variable tariffs priced by the cap, according to Ofgem, and the October announcement lands just as heating season approaches. Here is what is confirmed, what is forecast, and what households can do now.

When is the Ofgem price cap announcement date?

The confirmed answer sits in Ofgem's own paperwork. When the regulator set the current cap in May, its cap-change notice stated that the October to December 2026 levels "will be published by 26 August 2026". Ofgem reserves the right to publish earlier if circumstances warrant, but 26 August is the deadline, and recent quarters have run close to it.

The timing is not arbitrary. The cap is recalculated every three months from a basket of costs, the largest being wholesale energy prices averaged over a set window — for October, 19 May to 18 August, closing on Tuesday. Once it shuts, the wholesale element is fixed and final forecasts tend to land within a pound or two of Ofgem's confirmed figure.

A note of caution: some aggregator sites are telling readers the announcement comes in late September. That is wrong; the regulator's own notice fixes publication at no later than 26 August.

Energy price cap October 2026: the forecasts in full

Cornwall Insight's projection, updated on 22 July after the VAT cut was announced, puts the October cap at £1,699.58 a year for a typical dual-fuel Direct Debit household — £860.47 for electricity, £839.10 for gas — a rise of around 2% on the current £1,663 cap.

The forecast spread among credible sources is narrow, and all of it points up:

| Forecaster | Oct–Dec 2026 cap (new definition) | Change vs July cap | Published | |---|---|---|---| | Cornwall Insight | £1,699.58 | around +2% | 22 July | | E.ON Next | £1,717 | around +3.2% | 11 August | | EDF forecasting service | around £1,725 | around +3.7% | week of 11 August |

E.ON Next labels its own £1,717 prediction "low confidence" until the wholesale window closes, and the EDF figure was reported via MoneySavingExpert's fixed-deal analysis, updated 14 August. The gap between the most optimistic and most pessimistic forecast is about £25 a year, or roughly £2 a month.

Why up at all, given a tax cut? Wholesale gas prices firmed through the summer window, which Ofgem links to volatility from the Middle East conflict. Before the VAT announcement, MoneySavingExpert reported October forecasts drifting from a 3.1% rise to 5.1% on wholesale strength alone. In one line: wholesale costs add £85 to £90, the tax cut removes about £45, and households keep the difference as a modest increase.

Why £1,700 and £1,906 describe the same forecast

From 1 July 2026, Ofgem cut its Typical Domestic Consumption Values, the assumed usage of a "typical" household, from 2,700 to 2,500 kWh a year for electricity and from 11,500 to 9,500 kWh for gas. The regulator said median consumption had fallen 7% for electricity and 17% for gas, so the old yardstick no longer described a normal home.

The headline annual figure is nothing more than unit rates multiplied by assumed typical usage. Change the assumption and the headline changes, even if prices do not move at all. That is why Cornwall Insight publishes its October forecast both ways: £1,699.58 on the new basis and £1,906.27 on the old one. They describe identical unit prices.

The practical danger is mixed comparisons. Set a new-basis October figure against an old-basis figure from earlier in the year and you manufacture a phantom £200 fall; do it the other way round and you invent a dramatic rise. The stable comparators are the unit rates and standing charges themselves.

What is the electricity VAT cut worth?

VAT on domestic electricity in England, Scotland and Wales falls from 5% to 0% on 1 October 2026, running until 31 March 2027. Gas keeps its 5% rate. Prime Minister Andy Burnham announced the measure on 21 July, his second day in office, in the same reshuffle week that made Miatta Fahnbulleh Energy Secretary in place of Ed Miliband. Reports from AJ Bell and ITV News put the cost at around £850 million in 2026-27, funded by cancelling the planned digital ID programme, and suggested it would shave roughly 0.1 percentage points off inflation.

For a typical dual-fuel household the saving is worth about £44 a year on Cornwall Insight's arithmetic, or "around £45" on the government's own estimate. Because the relief applies only to the electricity half of a bill, it cannot offset a rise in gas costs pound for pound, which is precisely what is happening this quarter.

Dr Craig Lowrey, principal consultant at Cornwall Insight, said the cut "will be particularly welcome as we move into winter", singling out larger households, homes with electric heating and anyone with high electricity demand due to a medical need. Martin Lewis of MoneySavingExpert was blunter about the average household's experience, calling the policy "a good totem" while warning: "No one is really going to feel very much change in their pocket from this."

Both are right. The biggest winners are high-electricity homes — heat pumps, electric vehicles, storage heaters, medical equipment — where the saving applies to a much larger electricity spend. Gas-heated homes gain least, and Northern Ireland is excluded under post-Brexit VAT rules, with Stormont promised comparable funding instead. Electrification advocates note a limit: most of the electricity-gas price gap comes from policy levies, which the cut leaves untouched.

Current energy price cap unit rates

Until 30 September, the cap for a Direct Debit customer at Great Britain average rates, including 5% VAT, stands at:

| Fuel | Unit rate | Standing charge | |---|---|---| | Electricity | 26.11p per kWh | 57.19p per day | | Gas | 7.33p per kWh | 29.04p per day |

Those rates took effect on 1 July, when the cap rose 13%, with the gas element up 24% and electricity up 5%, adding roughly £18 a month for a typical household. Rates vary slightly by region and are higher for standard credit customers.

Painful as July's rise was, Ofgem notes the cap remains 54%, or £2,197, below the height of the energy crisis, when the government's Energy Price Guarantee capped a typical bill at £2,500. Bills are far off their peak yet still well above pre-2021 levels, which is why energy remains central to the cost-of-living squeeze alongside rents that are still climbing across Britain.

What can households do before winter?

The clearest opportunity is in the fixed-tariff market. MoneySavingExpert's analysis, updated on 14 August, found the cheapest widely available fixes priced 7% to 10.5% below the current July cap. Fuse's 18-month "August 2026 Fixed V3" led at 10.5% under, with E.ON Next's 24-month exclusive at 7.3% under and Ecotricity's two-year deal at 7% under. With October forecast to rise 2% to 4%, many households on standard tariffs find that a fix beating today's cap by a healthy margin locks in a saving for both this quarter and the winter.

Fixing does not sacrifice the VAT cut: suppliers apply the zero rate to all domestic tariffs, so a fixed deal's electricity element gets the same relief from 1 October. The usual checks still apply — quotes are postcode-specific, exit fees differ, and a household's own usage pattern matters more than the "typical household" headline.

Beyond tariff choice, anyone on a variable tariff without a smart meter benefits from a meter reading close to 30 September, so summer units are not estimated at October prices. Households in arrears can also ask suppliers about repayment plans and hardship funds before the heating season, support Ofgem requires them to offer.

The wildcards that could still move bills

Two live policy questions hang over the winter. The first is an Ofgem consultation, closed on 24 June and still awaiting a decision, on adding a new cost allowance to the cap for the Electricity Bill Discount Scheme, which will fund discounts for households living near new or upgraded transmission infrastructure. If the decision lands alongside the August announcement, it could add a small new line to the cap's make-up, though no figure has been confirmed.

The second is the VAT cut's expiry on 31 March 2027. The relief is funded only for this financial year, with an extension to be considered at the Autumn Budget. E.ON Next's early forecasts already sketch the risk: £1,785 for January to March 2027 and £1,798 for the spring quarter that would follow VAT's return. If the zero rate lapses, spring comparisons will be distorted upwards just as this autumn's were distorted downwards.

The wider economic backdrop gives the government little room for giveaways. Between a £22 billion export risk from American tariffs and the employer costs flowing from this year's Employment Rights Act changes, the pressure on both public finances and household budgets that followed Labour's local election crisis in May has not eased. A £45 electricity saving is real money, but it is competing with forces pushing the other way.

Frequently Asked Questions

When is the next Ofgem price cap announcement?

Ofgem will publish the confirmed cap for 1 October to 31 December 2026 by 26 August 2026, and possibly a day or two earlier. The date comes from Ofgem's own cap-change notice published in May. Final forecasts from Cornwall Insight and EDF are expected shortly after the wholesale assessment window closes on 18 August.

Will energy bills go up or down in October 2026?

Up, on every credible forecast. Cornwall Insight expects around a 2% rise to £1,700 a year for a typical household, E.ON Next predicts £1,717 and EDF's forecasting service points to about £1,725. Rising wholesale gas prices over the summer outweigh the £45 electricity VAT saving, so the net movement is a modest increase rather than a fall.

Why are there two different price cap figures for October?

Because Ofgem changed its typical-consumption assumptions on 1 July 2026, cutting assumed electricity use from 2,700 to 2,500 kWh a year and gas from 11,500 to 9,500 kWh. The same forecast unit prices therefore produce £1,699.58 under the new definition and £1,906.27 under the old one. Only comparisons made on the same basis are meaningful.

Do I need to do anything to get the electricity VAT cut?

No. From 1 October 2026 suppliers must apply the zero VAT rate automatically to all domestic electricity tariffs in England, Scotland and Wales, including fixed deals, EV tariffs and heat pump tariffs. British Gas and EDF have both confirmed automatic pass-through. Gas is unaffected and keeps its 5% VAT rate, and Northern Ireland receives separate support instead.

Is the electricity VAT cut permanent?

No. The zero rate runs from 1 October 2026 to 31 March 2027, the end of the financial year, at a reported cost of around £850 million. The government has said extending it will be considered at the Autumn Budget. If it lapses, electricity bills would rise by roughly the same £45 a typical household is saving, on top of whatever the cap does in April.

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