Ofgem’s household price cap goes up 4% on 1 October, from £1,663 to £1,723 for a typical dual-fuel direct debit customer. That is about £5 a month, and it will get most of the headlines. For anyone buying energy for a business, though, the more useful story sits behind the cap: a gas market that is still jumpy, a European storage position that starts winter milder than last year, and a run of surveys showing how much the cost is already costing firms.
What is pushing prices up
Ofgem puts the rise down to wholesale gas, which climbed 11% over the three months before the announcement on 26 August and added 8% to gas bills. The regulator points to tension in the Middle East. Government action on VAT and levies took some of the sting out: without the removal of VAT on domestic electricity, Ofgem says the cap would have been about £45 higher. Electricity bills stay broadly flat as a result.
Households on the cap have that cushion. Businesses do not. Non-domestic customers on flexible or renewing contracts take wholesale movements more or less directly, and the picture from the wholesale market is not comforting. According to the NRLA’s September update, gas ended August at around 167p/therm and power at £130/MWh, after touching £146/MWh earlier in the month. Forward prices for the rest of 2026 and winter 2026/27 were up about 15% for gas (to roughly 170p/therm) and 10% for power (to nearly £140/MWh). The same update warns of another double-digit gas increase if the winter turns out cold.
The supply backdrop explains the nervousness. Utility Helpline’s 23 September analysis says roughly 18% of global LNG supply has been removed by conflict and disruption. Traffic through the Strait of Hormuz has fallen from around 125 large commercial vessels a day to about 12, and European imports of Qatari LNG are down around 61% so far this year. European gas storage stands at 69%, twelve percentage points below the same point last year. Getting from 70% to 73% would take another 5.1 billion cubic metres, roughly 53 LNG cargoes. Britain leans more heavily on US LNG as other sources tighten, and gas still generates 24.5% of our electricity, so gas price swings feed into power prices too.
One oddity worth noting for anyone signing a contract now: the curve is steeply inverted. Winter 2026 gas trades around 184p/therm, while summer 2028 is nearer 107p/therm. Longer-term deals currently look cheaper than short-term ones, which is unusual and worth pricing.
The cost of the cost!
The strain shows up in business surveys. A poll of 526 UK businesses by EDF Small Business, Enterprise Nation and Square, published on 11 September, found that 69% had delayed or cancelled growth plans in the past year and half had cut investment. Respondents said rising energy bills had trimmed profit margins by about 18% on average. Among high street businesses, 77% had put growth on hold.
Large users are just as worried. An npower Business Solutions survey of more than 400 large energy users, reported on 18 September, found 93% concerned about the financial impact of the clean energy transition and 86% wanting more government financial support. Energy has been the top business risk for five years running, and 78% of respondents expect costs to go up over the next 12 months. The same research puts UK medium, large and very large firms paying 90%, 130% and 110% more for electricity than the EU14 median. It also projects peak business energy costs of £523/MWh in January 2028, during the Capacity Market charging period.
The Clean Power 2030 argument
The headline finding from the npower survey was that one in ten large users would now back pushing the government’s Clean Power 2030 target back to 2035. One in ten is a minority, and it is worth saying so plainly. The survey also found businesses still support the renewable goals themselves. The frustration is with costs they cannot control, which Anthony Ainsworth, nBS’s chief operating officer, said were hurting confidence and competitiveness.
The politics are already noisy. Attacks on the cost of the clean power plan have been circulating widely this month, and some of that material comes from campaigning outlets with a clear position. Readers should treat headline cost claims with care and look for the underlying analysis. The more grounded point is the one the surveys make: firms are being asked to plan for a transition while paying far more for electricity than European competitors.
There is an awkward logic here too. The latest DESNZ figures for May to July show renewables supplying 48.5% of generation, but the low-carbon share fell 5.4 percentage points year on year to 63.2%, mostly because nuclear output dropped 27% and gas generation rose 18%. A grid that leans on gas is a grid that inherits gas price risk.
What to do about it?
For most businesses the practical answer is dull but effective. Check when your contract ends and what the renewal terms are, because April is a peak renewal month and this winter’s pricing may be poor for anyone forced to buy at short notice. Ask suppliers for both short and long-term quotes given the inverted curve. Look at flexible or blended purchasing rather than a single fixed price at a bad moment.
Efficiency deserves more attention than it gets. In the EDF survey, 75% of small businesses did not know what efficiency grants or reliefs were available, and 69% were unaware that cutting energy costs by 20% has roughly the same profit effect as 5% sales growth. On-site solar, better metering and load management all reduce exposure to wholesale swings, and the case gets easier every time the gas price jumps.
The Budget is the next date to watch. In the EDF survey, 37% of businesses were asking for a VAT reduction ahead of it, and the domestic VAT change shows the Treasury is willing to use tax to blunt energy costs. Whether any of that reaches non-domestic customers is the open question. Until it does, the sensible assumption is that the Gulf, not Westminster, will set the direction of your winter bill.