Go.Compare energy expert comments on today’s price cap increase

Ofgem has today (26th August) announced a 4% increase to the energy price cap,* The new price cap will come into effect on October 1st, 2026, meaning the average annual energy costs for a typical household will increase by £60, from £1,663 to £1,723. 

The change will take effect on the same day that the Government’s temporary removal of VAT on domestic electricity bills begins, with VAT on electricity due to fall from 5% to 0% for six months.** 

Gareth Kloet, energy expert at Go.Compare, commented: “It’s always disappointing for billpayers to hear that the price cap has risen, but it’s not unexpected. We’ve seen natural gas prices rising again in recent weeks, and they are more volatile than they were over the previous 12 months, so there’s a risk that energy prices could remain elevated and even rise further over the winter. 

“Today’s announcement is the first price cap based on Ofgem’s updated Typical Domestic Consumption Values (TDCVs), which came into effect in July.*** TDCVs estimate the amount of gas and electricity used by a typical household each year. Because the updated figures reflect lower average energy use across the UK, Ofgem’s benchmark consumption levels have fallen by 7% for electricity and 17% for gas. As a result, the headline price cap may appear lower than before, even though many households may not see the same reduction in their bills. 

“This change in TDCVs makes it more important than ever to look beyond the headline price cap figure when assessing your energy costs. Unit rates and standing charges are the most consistent measures to use when comparing what you’ll actually pay. 

“While the Government’s temporary VAT cut on electricity should offer some help to customers over the winter, it also makes the October price cap harder to compare with previous announcements, as earlier caps included VAT on electricity while the new rates will exclude it for six months. 

“The reduction in TDCVs also suggests households are becoming more energy efficient and finding ways to reduce their consumption, which is encouraging. However, with the colder months approaching, now is a really good time to review your current tariff and make sure it still offers the right deal for your household, particularly if you’re on a standard variable tariff. 

“On a variable tariff, the price you pay can change as wholesale energy costs fluctuate, meaning that households are exposed to higher bills if wholesale prices rise. A fixed-rate tariff can sometimes cost more upfront, but it provides greater certainty by locking in your rates for the duration of the contract. For anyone concerned about unexpected price rises, that stability may be worth considering. Before you switch, however, you’ll need to check how long remains on your current contract and whether there are any exit fees, and make sure you compare the unit rates and standing charges rather than focusing solely on the headline tariff price. 

“Also, with autumn around the corner, now is a good time to think about some simple changes you could make to your home to prepare for the colder months. This year’s unusually warm summer may mean that some of our winter energy saving habits have fallen by the wayside, so it’s worth checking things like your heating controls and timers as well as making sure you draught-proof any windows and doors – both of these are inexpensive ways to make sure that your heating isn’t working harder than it needs to before the temperatures drop.” 

To learn more about the energy price cap, visit: https://www.gocompare.com/gas-and-electricity/guide/energy-price-cap/.  

And for more information on how to switch energy providers, Go.Compare has put together a guide which you can find here.