Who Sets the Energy Price Cap 2026: Ofgem and £1,723

Last updated: Sunday 1 November 2026

Who sets the energy price cap? Ofgem, the energy regulator for Great Britain, sets it under the Domestic Gas and Electricity (Tariff Cap) Act 2018 and reviews it every three months. As of 1 November 2026, the cap for 1 October to 31 December 2026 is £1,723 a year for a typical dual fuel household paying by Direct Debit, up 4% on the previous quarter, and Ofgem will announce the January to March 2027 level by 25 November 2026. The government does not set the cap, but its decisions on VAT, levies and standing charges change what goes into it. The cap limits unit rates and standing charges, not your total bill, and it does not apply in Northern Ireland or to businesses. This SwitchSquid guide explains who decides, how the number is built and when it changes next, using Ofgem, legislation.gov.uk, GOV.UK and Utility Regulator sources checked on 1 November 2026. If you compare tariffs through the buttons on this page, we may earn a commission; it does not change the price you pay.

Sources: Ofgem energy price cap, Domestic Gas and Electricity (Tariff Cap) Act 2018, GOV.UK, 28 October 2026, HMRC VAT on fuel and power and Utility Regulator.

Who sets the energy price cap: Ofgem, not the government

The cap is set by Ofgem, the trading name of the Gas and Electricity Markets Authority. The Domestic Gas and Electricity (Tariff Cap) Act 2018 places a legal duty on the Authority to cap standard variable and default tariffs, and requires it to review the cap at least every six months and report to the Secretary of State. In practice, Ofgem now updates the cap every three months.

Ministers cannot simply pick a number. What they can do is change the costs that go into it. The 0% VAT on household electricity that started on 1 October 2026 is one example: GOV.UK says it made the October cap £45 a year lower than it would otherwise have been. The plan announced on 28 October 2026 to remove gas standing charges is another, and Ofgem has been asked to deliver it.

The energy price cap from 1 October to 31 December 2026

These are Ofgem’s average capped rates for Direct Debit customers in Great Britain. Your own rates vary by region and payment method.

In Great Britain there is no VAT on household electricity from 1 October 2026, while gas carries 5%, and Ofgem’s rates reflect both. In Northern Ireland, household electricity stays at 5% VAT, according to HMRC’s VAT on fuel and power notice. Ofgem puts the rise down mainly to higher wholesale gas prices linked to the conflict in the Middle East. For the history of the numbers, see our energy price cap tracker and our guide to the winter 2026 price cap.

How Ofgem works out the energy price cap

Ofgem adds up the costs a supplier faces in supplying a typical home, then sets the maximum unit rates and standing charges a supplier can charge on a default tariff. The £1,723 headline is what those capped rates cost a household using a typical amount of gas and electricity.

Wholesale costs are usually the biggest moving part, which is why the cap rises when gas markets jump. Our guide to standing charges and unit rates explains how each part shows up on your bill.

The price cap limits rates, not your total bill

This is the point most people miss. The cap sets the maximum a supplier can charge per kWh and per day on a standard variable tariff. If you use more energy than a typical home, your bill will be more than £1,723, and if you use less, it will be lower. Our guide to whether the price cap works goes into the arguments for and against.

The cap also does not cover everything. Ofgem says it does not apply to fixed tariffs, heat networks, heating oil or business energy contracts.

When the energy price cap changes next

Ofgem announces each new cap about five weeks before it starts. Here are the dates Ofgem has published.

Our next price cap announcement page and our January 2027 forecast track what analysts expect before the announcement.

What the Autumn Budget changes for the price cap

On 28 October 2026 the government said it will ask Ofgem to remove standing charges from household gas bills in 2027 or as soon as possible after. GOV.UK puts the typical gas standing charge at £108 a year and says around 23 million homes will be affected. The fixed costs will move onto the gas unit rate, which the government says could save 60% of account-holding households an average of around £45 a year. Households that use a lot of gas may not see a saving, and the government says it will set out targeted support for a small number of homes.

Ofgem has to build the change into the cap rules, and the target is 2027 or as soon as possible after, so do not count on it in the January 2027 cap. Electricity standing charges are not part of the announcement. The Budget also extended the 0% VAT on household electricity in Great Britain to 30 June 2027, with the 5% rate applying from 1 July 2027.

Who sets energy prices in Northern Ireland?

Northern Ireland has its own energy market and regulator, and the Ofgem cap does not apply there. The Utility Regulator regulates Power NI, the only supplier with regulated household electricity tariffs, through a price control that runs from 1 April 2025 to 31 March 2029. From 1 July 2026, Power NI’s maximum average charge is 32.52p per kWh excluding VAT, up from 30.62p, which raised a typical bill from about £1,029 to £1,093 a year. Other suppliers set their own prices and compete against Power NI. Household electricity in Northern Ireland still carries 5% VAT, because the 0% rate applies in Great Britain only.

Fit summary

• Stay on the capped tariff if: you want flexibility, as standard variable tariffs have no exit fees and follow the cap each quarter.

• Look at a fixed deal if: you want certainty before the 25 November announcement; compare it against the cap rates above. Our cheapest fixed energy deals guide shows how.

• Check extra support if: you are on a low income, as the Warm Home Discount is worth £150.

• The GB cap is not for you if: you live in Northern Ireland, heat with oil, are on a heat network or run a business.

Important conditions

• The £1,723 figure is for a typical dual fuel home paying by Direct Debit in Great Britain. Your bill depends on how much energy you use.

• Capped rates vary by region and payment method; the rates above are Ofgem’s averages.

• The gas standing charge removal is a government plan for Ofgem to deliver, not a change on your bill yet.

• Fixed tariffs are not covered by the cap. Check exit fees and the unit rates before you switch.

• Northern Ireland electricity prices are regulated by the Utility Regulator, not Ofgem.

Final decision card

Ofgem sets the energy price cap, reviews it every three months and will announce the January 2027 level by 25 November 2026. The cap of £1,723 limits rates rather than your bill, so the useful step is to compare your tariff against it before the announcement. If you would like help reading your bill, ask Squid AI.

FAQ

Who decides the energy price cap?

Ofgem, the regulator for Great Britain, decides the cap. It has a legal duty to do so under the Domestic Gas and Electricity (Tariff Cap) Act 2018. The government can change costs such as VAT and levies, but it does not set the cap itself.

How often is the energy price cap reviewed?

Ofgem updates the cap every three months. The law requires a review at least every six months. The next announcement is due by 25 November 2026, for January to March 2027.

Can the government change the energy price cap?

Not directly. It can change what goes into it, for example the 0% VAT on household electricity from 1 October 2026. It has also asked Ofgem to remove gas standing charges in 2027 or as soon as possible after.

Is the energy price cap a limit on my bill?

No. It caps the unit rates and standing charges on standard variable tariffs. If you use more energy than a typical household, you will pay more than £1,723 a year.

Does the price cap apply in Northern Ireland?

No. Northern Ireland’s Utility Regulator regulates Power NI’s household electricity tariff through a price control. From 1 July 2026, Power NI’s maximum average charge is 32.52p per kWh excluding VAT. VAT on household electricity there stays at 5%.

Does the energy price cap cover fixed tariffs?

No. Fixed tariffs have their own rates for the length of the deal. The cap only covers standard variable and default tariffs, so compare any fix against the capped rates.

Why did the price cap go up in October 2026?

Ofgem says the 4% rise was driven mainly by higher wholesale gas prices linked to the conflict in the Middle East. The 0% VAT on electricity from 1 October 2026 kept the increase lower than it would have been.