Energy price cap to rise 2% to £1,755 for Q4 2025

The Ofgem energy price cap for a typical household will increase by 2% to £1,755 for the final quarter of 2025, according to the Scottish Government's September 2025 economic insights, published on 26 September 2025¹. The cap takes effect from 1 October 2025². The cap is the maximum amount energy companies can charge customers on prepayment or standard variable tariffs, and Ofgem, the UK energy regulator, sets its level and reviews it every three months².

The cap has moved sharply over the year. It stood at £1,717 annually for a typical household at the end of 2024, rose to £1,849 in Q2 2025, fell in Q3, and now rises to £1,755 for the final quarter¹. Your Money reported the new level as up £35 on the previous cap³. Cornwall Insight forecasts the cap will fall to £1,701 at the start of 2026¹.

The cap is not a limit on total bills. It caps unit rates and standing charges, so what a household pays depends on how much energy it uses². It applies to domestic energy in England, Scotland and Wales, not to business energy prices². Santander attributed part of the increase to the Warm Homes Discount expansion, which knocks £150 off winter bills for eligible households and has been extended to an extra 2.7 million households this winter, and to the extension of a scheme covering the cost of energy debt customers accumulate². The Independent reported Ofgem said the increase reflected higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global markets remaining the dominant driver of price changes⁴.

Why it matters for households

The change affects households on prepayment or standard variable tariffs in England, Scotland and Wales from 1 October 2025². The Independent reported that more than four million homes remaining on a standard energy tariff were urged to send in meter readings to avoid paying higher prices from 1 October, and that submitting a reading before or on that date, for those without a smart meter, ensures energy used is charged at the correct rates rather than estimated by a supplier⁴. Homes on a standard tariff with average usage were expected to spend £145 on energy in October, compared with £109 in September, an increase of a third driven by cooler temperatures and higher unit rates⁴.

The cap sits alongside wider household pressures. Consumer price inflation was 3.8% in August 2025, unchanged from July, having fallen from 3% in January to 2.6% in March before rising again¹. Annual inflation in electricity, gas and other fuels rose to 9.3% in August, from negative at the end of 2024¹. Food and non-alcoholic drink inflation rose from 2% at the end of 2024 to 5.1% in August¹. The Bank of England cut interest rates three times in 2025, from 4.75% in January to 4% in August, and the effective interest rate on new mortgages fell from 4.5% at the start of the year to around 4.3%¹. The savings ratio stood at 6.6% in the latest data, up from 6.2% in the previous quarter and 5.6% a year earlier¹.

What happens next

The cap runs for the final quarter of 2025¹. Cornwall Insight forecasts a fall to £1,701 at the start of 2026¹. Ofgem reviews the cap every three months².