Morning. If your energy bill just went up and you're not entirely sure why, or by how much, this one's for you.
Ofgem's price cap rose 4% from 1 October, and it'll stay at that level until the end of December. That's the headline most people saw. What's less widely understood is what the cap actually controls, and it's not what most people assume.
What actually changed on 1 October
For a typical household paying by direct debit for both gas and electricity, the price cap moved from £1,663 a year to £1,723 — a rise of £60 a year, or roughly £5 a month. The increase isn't even across gas and electricity: gas is up around 8%, while electricity costs are close to flat, because the Government removed VAT from electricity bills for six months from October, which offset most of what would otherwise have been a bigger rise.
Not everyone is affected. Around 11 million households, roughly 35% of the country, are on fixed tariffs and won't see any change from this update. This rise only applies if you're on your supplier's standard variable, or "default", tariff.
The myth we're putting right
"The energy price cap limits what I'll pay this year."
Not quite. The cap limits the rate per unit of gas and electricity, and the daily standing charge, not your total bill. The £1,723 figure is only what a household using a defined "typical" amount of energy would pay. Use more than that, and your bill is higher than the headline number; use less, and it's lower. The cap protects you from being overcharged per unit, but it does nothing to cap what you actually spend if your usage is above average.
This is worth knowing because it changes where your actual control lies: you can't do anything about the capped rate itself, but usage is entirely within your control, and it's usually where the real savings are.
Is fixing worth it right now?
The cap is reviewed every three months, and Ofgem confirms the next level on 25 November for the January–March 2027 period; several analysts are currently predicting a further rise. Some fixed tariffs today are already priced below what that next cap could land at. A fix locks in a rate for the length of the deal, which trades the possibility of the cap falling again for certainty about what you'll pay.
There's no universally correct answer here, it depends on the specific fixed rate on offer when you compare, and how much you personally value certainty over the chance of a lower variable rate. What's worth avoiding is assuming the cap is always the cheapest option by default: it's a ceiling, not necessarily the best price available.
This month's number
£1,723 is the new annual price cap figure for a typical dual-fuel household paying by direct debit, covering 1 October to 31 December 2026. Underneath that headline: electricity is priced at roughly 26.3p per kWh with a standing charge of about 54.8p a day, and gas at roughly 8.0p per kWh with a standing charge of about 29.7p a day. Your actual bill is these rates multiplied by whatever you actually use, not the £1,723 figure itself.
Where to start on the site
If you want to see how your current tariff stacks up, our energy comparison is the place to start. If you're after ways to actually bring the bill down rather than just understand it, this month's article on energy-saving tips that actually work covers what's genuinely worth doing versus what's just repeated advice. And if a chunk of this month's bill rise is unwelcome news for the wider budget, the Budgeting, actually explainer (with the free template) is the fastest way to see exactly where it needs to come from.
See you next month.
This newsletter provides general educational content, not personalised financial advice. Figures and thresholds mentioned may change; always check current rates before relying on them.