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Energy Price Cap October 2025: What It Means for Your Bills
Vicky Parry
29th Sep 2025
Vicky Parry has over a decade of experience covering personal finance, energy, and welfare policy for national press. She specialises in breaking down complex topics into practical advice for households.
Understanding the Energy Price Cap
As of October 1, 2025, the UK’s energy price cap has risen to £1,755 per year for a typical dual-fuel household paying by Direct Debit, up from £1,720 in the previous quarter — a 2% increase.
The energy price cap, set by Ofgem, limits the maximum amount suppliers can charge per unit of gas and electricity, as well as the daily standing charge. It primarily applies to standard variable tariffs, which are the default for many consumers.
October 2025 Price Cap Breakdown
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Electricity: 26.35p per kWh, standing charge 53.68p per day
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Gas: 6.29p per kWh, standing charge 34.03p per day
Note: Different rates may apply for prepayment meters or standard credit customers.
Why Energy Prices Fluctuate
Energy prices change frequently because of:
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Wholesale Energy Costs – Global market shifts affect gas and electricity prices.
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Network and Policy Costs – Infrastructure investments and government policies impact distribution costs.
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Regulatory Adjustments – Ofgem reviews the cap quarterly to reflect these changes.
Quarterly adjustments aim to protect consumers from sudden spikes while ensuring suppliers can cover costs.
Inflation and Its Impact on Energy Bills
As of August 2025, the UK’s Consumer Prices Index (CPI) stood at 3.8%, unchanged from July. This elevated inflation rate is attributed to surging food prices and a recent £25bn annual increase in employer National Insurance Contributions (NICs).
Despite the 2% increase in the energy price cap, the real impact on consumers is amplified by the broader inflationary pressures. Rising costs in other sectors mean that households have less disposable income to absorb higher energy bills.
How This Affects Your Energy Bills
For a typical household, the £1,755 cap translates to an average annual bill of approximately £1,755. However, actual bills can vary based on individual energy consumption patterns.
Breakdown of the Cap:
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Electricity: Unit rate of 26.35p per kWh and a standing charge of 53.68p per day.
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Gas: Unit rate of 6.29p per kWh and a standing charge of 34.03p per day.
These rates apply to households paying by Direct Debit. Different rates may apply for prepayment or standard credit customers. Ofgem
It’s important to note that while the cap sets a maximum limit, actual bills depend on your energy usage. Higher consumption will result in higher bills, even within the capped rates.
Types of Energy Tariffs and Their Impact
Not all energy tariffs are affected by the price cap. Here’s a breakdown:
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Standard Variable Tariffs (SVTs): These are the default tariffs that fluctuate with the price cap.
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Fixed Tariffs: The cost of your energy is set for a certain amount of time, typically for a year or more. You usually have to pay a fee—known as an early exit fee—if you want to cancel the contract before the end of the fixed term.
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Economy 7 and Economy 10 Tariffs: These are time-of-use tariffs where electricity is cheaper during off-peak hours. The price cap applies to these tariffs as well.
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Prepayment Tariffs: These tariffs are for customers who pay for their energy in advance using a prepayment meter. The price cap applies to these tariffs too. Energy Saving Trust
If you’re on a fixed tariff, your rates are locked in for the duration of your contract, and the price cap won’t affect you until your contract ends. However, if you’re on a standard variable tariff, your rates will change in line with the price cap adjustments.
Support for Struggling Households
If you’re concerned about affording your energy bills, several support options are available:
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Warm Home Discount Scheme: Eligible low-income households can receive a £150 discount on their electricity bill. Eligibility has expanded, and applications are open from October 1, 2025.
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Energy Company Obligation (ECO4) Scheme: Provides free energy-saving improvements like insulation and heating upgrades to eligible households. OVO Energy, for example, is offering free electric throws, mattress toppers, and potential full installations of energy-saving upgrades.
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Cost-of-Living Payment: The UK government has announced a £200 cost-of-living payment for eligible residents, set to be distributed in October 2025.
Additionally, many energy suppliers offer assistance programs for customers facing financial difficulties. It’s advisable to contact your energy supplier directly to inquire about available support.
Managing Costs: Your Options
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Submit Accurate Meter Readings – Avoid overestimated bills.
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Consider Fixed Tariffs – Lock in a lower rate to protect against future cap increases.
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Reduce Consumption – Energy-saving measures reduce total bills.
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Check Government Assistance – Apply for schemes and discounts.
Future Projections
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Q1 2026: Slight drop to ~£1,712 due to lower wholesale prices.
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Mid-2026: Potential rise to £1,895 if policy and wholesale costs increase.
Compare Tariffs Now and Avoid the Hike
With the energy price cap rising in October 2025, now is the perfect time to check if you’re on the best deal. Many households remain on standard variable tariffs, which adjust automatically with the cap. Switching to a fixed or cheaper tariff before October could save hundreds of pounds annually.
MoneyMagpie’s free energy comparison tool lets you:
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Compare all major suppliers in seconds
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Filter by payment method (Direct Debit, prepayment, standard credit)
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See estimated savings based on your usage
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Switch safely and securely in minutes
Even small differences in rates can make a significant impact on your pocket. Use our tool today to lock in a better rate before the October cap increase.
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