1. The short answer
£1,723 a year from 1 October, up £60 or 4 percent on the £1,663 cap now in force. Ofgem confirmed the level on 26 August 2026, a day earlier than most expected. It applies from 1 October to 31 December 2026 for a typical dual-fuel household paying by direct debit.
Two caveats before you compare it to anything. The cap limits unit rates and standing charges, not your total bill - if you use more than a typical household, you pay more than £1,723. And roughly 11 million households, about 35 percent, sit on fixed tariffs and are not affected by this change at all.
2. The number that actually matters: gas rose 8 percent
Short answer: the 4 percent headline is an average of two very different moves. Gas went up 8 percent. Electricity stayed broadly flat, because the government removed VAT from domestic electricity bills, and that offset what would otherwise have been a rise.
Which of those two numbers describes your bill depends on how you heat. A household on gas central heating feels most of the 8 percent. An all-electric household, or one on a heat pump, comes out close to flat. The single headline figure hides that split entirely, and it is the reason two neighbours can read the same news and have opposite experiences in October.
If you heat with gas and want a realistic expectation: apply 8 percent to the gas half of your current bill rather than 4 percent to the whole thing.
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3. Why the figure looks lower than the one you remember
Short answer: the yardstick changed in July, not just the price. Ofgem publishes the cap against Typical Domestic Consumption Values - an assumed annual usage for a typical household. Those values were revised in July 2026 and now assume households use about 7 percent less electricity and 17 percent less gas than the previous 2023 review.
That means the annual headline dropped without prices dropping. Comparisons that mix the old and new baselines are meaningless, and plenty of coverage mixes them. When you see a cap figure quoted anywhere, check which basis it uses before concluding that bills went up or down.
The practical consequence: judge the change by unit rate and standing charge, not by the annual headline. Those are the numbers on your statement, and they are what multiply against your actual usage.
4. What pushed this cap
Wholesale costs, moving with the same crude market as everything else. Brent traded around $92 a barrel in late August. The IEA's August report describes Gulf exports down 2.1 million barrels a day to 15 million after the Strait of Hormuz closure, global supply projected to fall 4.3 million barrels a day across 2026, and global inventories at their lowest since April 2025.
Pulling the other way: the removal of VAT on domestic electricity. That measure is why the electricity side held roughly flat while gas climbed 8 percent. Forecasts published before the announcement clustered slightly above the final figure - Cornwall Insight had £1,729.31 on 19 August against the confirmed £1,723, so about £6 high.
Standing charges remain the contested part. They are levied per day regardless of usage, which hits low-consumption households hardest in percentage terms. The debate about rebalancing them into unit rates is unresolved, and it matters far more for small flats and second homes than the headline suggests.
See what a further oil price shock would add to your household costs.
Run the scenario5. Should you fix now?
Short answer: compare any fixed offer against £1,723, and check the exit fee before the rate. Now that the level is confirmed, the comparison is straightforward in a way it was not a week ago - you are no longer betting against a forecast.
- A fix below £1,723 with low or no exit fees is worth serious consideration. You are buying certainty in a market where the IEA reports crude trading in a range of almost $40 a barrel within July alone.
- A fix above it only makes sense if budget certainty for more than a year is worth the premium to you. The cap resets quarterly and can fall as well as rise.
- High exit fees turn a fix into a bet. Without them you can leave if the Strait of Hormuz reopens and wholesale costs drop; with them you are locked into your view of the next twelve months.
- Already on a fix? You are among the roughly 11 million households this change does not touch. Check your end date rather than the cap.
Doing nothing is a legitimate choice, not a failure. You stay on the capped variable tariff at £1,723 - no certainty, but no penalty either.
6. What happens in January
The cap resets quarterly, so this level runs to 31 December 2026 and is replaced in January. The biggest variable is not domestic policy but the Strait of Hormuz.
Qatar reported on 12 August 2026 that talks between Oman and Iran were at an advanced stage; a reopening would ease wholesale costs into the January cap. Working the other way, the US Treasury announced expanded secondary sanctions against Iran on 24 August 2026, designating close to 60 entities, individuals and vessels - measures that remove supply rather than add it.
For 2027 the IEA projects global oil demand growing again by 2.4 million barrels a day. If that recovery meets a supply base that has not repaired itself, the pressure on the caps beyond this winter is upward rather than downward.