Ofgem price cap explained as energy bills set to rise again

Ofgem has announced its new energy price cap - but what exactly does this mean for your bills?

The price cap will rise from £1,720 to £1,755 for a typical dual fuel household paying by direct debit. This will come into effect on October 1 and will last until December 31, when the price cap will be updated again.

You will be covered by the Ofgem price cap if you are on a standard variable rate (SVR) tariff, so if you're not locked into a fixed rate deal.

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There are around 34 million people in England, Wales and Scotland that are currently on the price cap compared to approximately 20 million households who are on a fixed energy tariff.

But there isn't actually a total cap on what you can pay for energy. Your bill is still charged based on how much gas and electricity you use.

The Ofgem price cap limits what you can be charged for units of gas and electricity, as well as standing charges, which are fixed daily amounts you pay to be connected to the energy network.

The average unit rate for electricity is rising from 25.73p per per kilowatt hour (kWh) to 26.35p per kWh. The standing charge for electricity is going up from 51.37p a day to 53.68p a day.

The average unit rate for gas is falling from 6.33p per kilowatt hour (kWh) to 6.29p per kWh, while the standing charge is rising from 29.82p a day to 34.03p a day.

The price cap figure illustrates what someone with typical energy consumption can expect to pay each year. This is based on how much Ofgem estimates the typical household uses.

Ofgem assumes the average household consumes 2,700 kwh of electricity and 11,500 kWh of gas over 12 months. Where you live can also impact your energy bill, as unit rates also vary by region.

The headline numbers are used to give an average across England, Scotland and Wales. How you pay for your energy will also affect your overall bill, as there are different rates for prepayment customers and those who pay on receipt of bill.

Ofgem updates its price cap every three months - in January, April, July and October. The main factor it takes into account when working out its new price cap is the cost of wholesale energy.

The assessment period for wholesale energy prices for the new October price cap was from May 19, 2025, to August 18, 2025.

Ofgem also looks at the cost of maintaining pipes and wires that carry gas and electricity, network and operating costs, as well as VAT, payment method allowances and profits for the energy supplier.