What Ofgem announced
On 26 August 2026 Ofgem confirmed that the energy price cap will rise by 4% for the period from 1 October to 31 December 2026. A typical household paying by direct debit will see its annual bill go from £1,663 to £1,723, about £5 a month more.
Ofgem put the rise down to higher international gas prices linked to the conflict in the Middle East. Gas is where most of the increase falls, with household gas bills up around 8%, while electricity is broadly flat for households because of the removal of VAT on domestic electricity.
Does the price cap apply to businesses?
No. The price cap only covers household default tariffs. Business electricity and gas are priced on contract, based on the wholesale market at the time you buy, plus network, policy and other non-commodity charges. There is no cap to protect a business that rolls onto out of contract rates.
Why it still matters for business buyers
- The same wholesale market. The gas prices behind the household rise are the same prices suppliers use to quote business gas contracts. A business renewing gas this winter is buying into those conditions.
- Electricity follows gas. In Great Britain, gas fired power stations often set the wholesale price of electricity, so higher gas prices tend to feed through to business electricity quotes too.
- Timing carries more weight. When prices are moving on international events, the day you fix can make a real difference to the rate you are offered for the whole term.
What to do now
- Check your contract end dates. If any site renews in the next six to twelve months, it is worth looking at options now rather than in the final weeks.
- Avoid out of contract rates. If a contract ends without a new one in place, the supply continues on out of contract rates, which are usually well above contracted prices.
- Look at how you buy, not just who from. For larger users, buying in stages rather than on a single day can reduce the effect of short term swings. See risk-managed buying and fixed or flexible.
- Do not forget the rest of the bill. Non-commodity charges now make up over half of a typical business electricity bill, so it is worth checking those are correct too.
Common questions
Is my business covered by the energy price cap?
No. The price cap only applies to household default tariffs. Business energy is priced on contract, based on the wholesale market at the time you buy.
Will business energy prices rise in line with the price cap?
Not directly. Business prices depend on the wholesale market on the day you buy and on your non-commodity charges, but the higher gas prices behind the cap rise also affect business quotes.
Sources
- Ofgem: Energy price cap will rise by 4% from October 2026
- Ofgem: Changes to energy price cap between 1 October and 31 December 2026
Contains public sector information licensed under the Open Government Licence v3.0.
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