This July, Ofgem will be increasing the price cap to £1,862 for a typical home, consuming gas and electricity and paying by Direct Debit. The following page aims to help you understand the changes and why the price cap is changing on 1 July 2026.

Why are prices changing from 1 July 2026?

We know any price increase is unwelcome, particularly after prices reduced in April. The main reason for the July change is the higher cost of buying energy on wholesale markets, especially gas.

Ofgem reviews and updates the price cap every three months. The price cap for 1 July to 30 September 2026 is not based on the price of energy on a single day. It is built using market data and cost inputs from the relevant period before the price cap is set. That means recent movements in wholesale energy markets are now being reflected in the July price cap.

Over recent months, the ongoing conflict in the Middle East has had a clear impact on global energy markets. Gas prices have been particularly affected because markets have had to price in greater risk around Liquefied Natural Gas supply, shipping routes and future availability.

The UK does not rely on one single source of gas, but the gas market is global. When there is disruption or uncertainty in one part of the world, the cost paid by suppliers across Europe and the UK can increase.

Gas is also important because it still plays a role in setting electricity prices. When gas prices rise, electricity costs can rise too, even where electricity is generated from a mix of sources. This is why the increase this quarter is being seen across both gas and electricity, although gas is the larger driver.

Other costs are also included in the price cap. These include the cost of maintaining and operating the energy networks, metering, industry obligations, policy costs, VAT and other regulated allowances.

These costs are not all controlled by suppliers, but they form part of the overall cost of supplying energy to customers.
 

What makes up the price cap?

The energy price cap is designed to ensure that customers on standard variable or default tariffs pay a fair and regulated price for their energy. It is reviewed every three months and sets the maximum level suppliers can charge for:

• the unit rate, which is what you pay for each kWh of energy you use
• the standing charge, which is a fixed daily amount for being connected to the energy network

The cap is updated to reflect the costs suppliers face. This includes wholesale energy costs, network charges, operating costs, metering costs, policy costs and VAT.

What is a standing charge?

A standing charge is a fixed daily amount that applies to your gas or electricity supply. It is not based on how much energy you use. It helps cover the fixed costs involved in supplying energy to your home.

Standing charges help pay for things such as maintaining the electricity cables and gas pipes, operating the energy networks, metering services, system balancing, supplier obligations and other regulated costs.

Because these costs exist whether you use a lot of energy or very little, the standing charge cannot usually be avoided while you have an active energy supply. Even if you use no energy on a particular day, your home still remains connected to the network and those fixed costs still apply.

For July to September 2026, standing charges are broadly similar to the April to June period. The bigger change this quarter is the increase in unit rates, especially gas unit rates.

The New Price Cap

Between 1 July and 30 September 2026, the price cap rates are increasing.

The important point is this: the lower £1,663 headline figure is not because prices are falling. It is because Ofgem is using a lower typical usage benchmark from 1 July 2026. Your actual bill will still depend on your own energy use, unit rates and standing charges.

Your total bill will still depend on how much energy you use. If you are on a variable tariff, the July price cap change may affect your costs.

If you are on a single-fuel tariff, either gas only or electricity only, it may be worth checking whether a dual-fuel tariff would be better suited to your circumstances.

Cheapest variable on the market. No fix. No fuss. No catch.

Even after this change, our Home Energy Fair Variable tariff remains 14% below the Ofgem price cap and it continues to be the cheapest tariff in the UK market at Ofgem Typical Domestic Consumption Values.

This saving applies to customers who pay by Direct Debit only.

“Always the cheapest.  Always below the Price Cap. No fixed-term contract. No exit fees. No catch."

Ofgem is changing the TDCV values from 1 July 2026

TDCV stands for Typical Domestic Consumption Value. It is Ofgem’s estimate of the amount of energy a typical household uses in a year. It is used by Ofgem, suppliers, price comparison websites, media outlets and consumer organisations to show typical annual energy costs where a customer’s actual usage is not known.

From 1 July 2026, Ofgem is updating these values to reflect lower household energy consumption. In simple terms, Ofgem has reviewed how much energy households are now using and has decided that the previous benchmark is no longer representative of typical usage.

The main TDCV changes

Why is Ofgem changing the TDCV?

Ofgem reviews TDCVs every few years to make sure they still reflect how much energy a typical household uses. Household energy consumption has fallen over recent years. This is likely due to a mixture of improved energy efficiency, changes in household behaviour, warmer weather patterns and customers reducing usage in response to higher energy prices.

The new TDCVs are intended to make headline annual bill comparisons more representative of current typical consumption. They are not intended to estimate every household’s actual annual use.

Will the TDCV change affect my bill?

The TDCV change does not directly change your bill. Your bill is calculated using:

• your actual gas and electricity usage
• your unit rates
• your standing charges
• your payment method
• your meter type
• your region

The TDCV is only a benchmark used for typical annual examples. If you use more energy than the new benchmark, your bill will be higher than the headline figure. If you use less, your bill will be lower.

This change can make the headline annual price cap figure look lower than expected, because the comparison is now based on lower assumed usage. That is why it is important to look at your actual unit rates, standing charges and consumption, rather than relying only on a national headline figure.

Direct Debit

Direct Debit is our most popular payment method, with the majority of of our customers choosing this option. It allows you to spread your energy payments into manageable monthly amounts, so you avoid building up large debit balances during months of higher usage. For more details, take a look at our Direct Debit FAQs.

• Direct Debit remains cheaper on average than paying on receipt of bill.
• It spreads payments into manageable monthly amounts.
• We will automatically review your payments as part of our regular review cycles, so there is no need to contact us unless your circumstances have changed or you are worried about affordability.

A change to the price cap does not always mean your Direct Debit will change immediately. We review Direct Debits using your balance, estimated annual usage and current tariff rates. If your payment amount needs to change, we will let you know.

Payment on receipt of bill (Standard Credit)

This method involves paying for the energy you have used over a period of time, typically between two weeks and three months. This is usually a more expensive payment method than Direct Debit because the price cap allows higher rates for customers who pay on receipt of bill.

• Payment on receipt of bill costs more than Direct Debit. Using the previous medium usage benchmark for a like-for-like comparison, the average dual fuel bill is £2,005 a year compared to £1,862 when paying by Direct Debit.
• Using Ofgem’s revised TDCV benchmark from 1 July 2026, the equivalent annual comparison is around £1,796 for payment on receipt of bill compared to £1,663 by Direct Debit.
• If you would like to reduce your costs, you can set up a Direct Debit quickly and easily online or with our team.

Submit a meter reading

To make sure your next bill reflects the energy you have actually used, we recommend submitting a meter reading between 30 June 2026 and 3 July 2026. This helps us apply the right prices to the right period and reduces the chance of estimated usage being split incorrectly across the price change date.

• Submit your reading online via our website on the day.
• Have a smart meter? You do not need to submit a reading if your smart meter is communicating with us, as your readings should come through automatically.
• Do not have a smart meter yet? You can get one installed for free. Just call SMS Plc on 0330 135 9982 to book your appointment.

If you are manually reading your meter, check the number on your meter display and submit it via our website or app. You can find more guidance on how to read your meter on our website.

It is always a good idea to take a photo of your meter reading for your records. You can submit your readings quickly and easily online.

Smart meters

The ongoing rollout of smart meters is transforming how households manage their energy. With automatic and highly accurate meter readings, you will not need to submit readings manually if your meter is communicating correctly. Smart meters also provide a clearer view of your energy usage, helping you make more informed decisions about your consumption.

Want to get a smart meter?

You can contact SMS Plc, our smart meter installation partner, directly to book an appointment by calling 0330 135 9982.

With the price cap increasing, we remain committed to providing access to support for customers who are facing financial difficulty or struggling to pay for the energy they use.

We have a dedicated section in our FAQs outlining the support we offer, as well as details of other organisations that provide free, confidential and impartial advice.

If your circumstances have changed, or you are finding it difficult to pay for the energy you use, it is important that you contact us as soon as possible. We can discuss payment solutions and offer personalized support based on your circumstances.

Contact us

If you have any further questions regarding the price change that have not been addressed in our email, PDF attachment or FAQs, please contact our energy specialists who will be happy to help.

The quickest way to reach our team is via live chat. You will be connected to one of our energy specialists who can assist you with your query in real time.

*From 1 July 2026, headline typical annual bill examples are based on Ofgem’s updated medium TDCV values of 2,500 kWh electricity for a single-rate meter, 3,400 kWh electricity for a multi-rate / Economy 7 meter, and 9,500 kWh gas per year. Your actual bill will depend on your own energy consumption, tariff rates, standing charges, meter type, payment method and region.

Have a question we have not answered?

Let us know and we will do our best to help. If it is a question that comes up again, we will add it to our FAQs to help others.