Why Your Energy Bill Just Rose 13%
Ofgem's price cap rose 13% for July-September 2026 — driven by the Middle East conflict pushing up wholesale gas prices. Here's exactly how the cap is built, why it's reviewed every three months, and a genuine confusion in the headline figure itself that most coverage glosses over.
How it works
The energy price cap isn't a cap on your total bill — it's a cap on the maximum rate a supplier can charge per unit of gas or electricity, plus the daily standing charge, for anyone on a standard variable ("default") tariff. What you actually pay still depends on how much energy you use; two households on the same cap can have very different bills. Ofgem reviews and resets the cap every three months, built from several components: wholesale energy costs (roughly 40% of a typical bill, and by far the most volatile part), network and infrastructure charges, supplier operating costs, policy costs, VAT (5% on domestic energy), and an allowance for bad debt and supplier risk.
One mechanic surprises a lot of people: gas-fired power stations set the marginal price of electricity across the GB grid for a large share of generation hours, meaning gas prices drive electricity prices too, even for households that don't use gas directly at all. This is why a gas-specific supply shock (like a Middle East conflict disrupting shipping routes) shows up in electricity bills as well as gas ones.
The recent trajectory
Annual cap for a typical dual-fuel household on Direct Debit, old TDCV benchmark (Ofgem)
The cap fell to £1,641 for April-June 2026 — its lowest since 2024, helped by roughly £150 taken off bills in the Autumn Budget — before rising 13% to £1,862 for July-September, driven by higher wholesale gas prices as the Middle East conflict disrupted supply routes. Around 40% of accounts (22 million) are on fixed tariffs and are unaffected by any single quarter's cap change either way. Even at its recent low point, the cap sat roughly 35% above pre-crisis (pre-2021) levels — the idea that bills are "returning to normal" isn't supported by current forecasts.
The benchmark confusion
You may see two different headline figures for the same July-September 2026 cap: £1,862 and £1,663. Both are genuine — Ofgem updated its "Typical Domestic Consumption Values" (the assumed average household usage the headline figure is based on) at the same time as this cap reset. The new, lower TDCV benchmark produces a lower headline number for the same underlying per-unit rates, which is why most households will actually pay above the newer £1,663 headline once their real usage is applied — the older £1,662 benchmark remains the more consistent figure for comparing this quarter against previous ones like April-June's £1,641.
The 2022 crisis, for context
Today's volatility is genuinely mild by recent standards. Record wholesale prices during the 2022 energy crisis would have driven an 80% single-quarter increase in the cap without government intervention. Instead, the Energy Price Guarantee limited bill increases to 27% in October 2022 and capped typical bills at £2,500 — a level the market has not required since, as underlying costs fell back below that threshold by mid-2023. The scale of today's 13% quarterly move is real and worth taking seriously, but it's roughly a sixth the size of what the market briefly threatened in 2022.
Reactions
“This increase is a result of higher wholesale gas prices, caused by the ongoing conflict in the Middle East. Prices remain well below the height of the energy crisis in 2022.”
“The Q4 2026 forecast sits close to the current cap — households should not assume further quarterly falls are guaranteed given ongoing wholesale market volatility.”
In the news
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