05 Oct The Energy Price Cap Is Rising – But What Does It Mean for Businesses?
If you have seen the recent headlines about the energy price cap increasing, you may be wondering what this means for your business.
The short answer is: the domestic energy price cap does not apply to businesses.
However, it is still something worth paying attention to.
At Energy Smart Consultancy, we often find that business clients understandably use the domestic price cap as a reference point when thinking about energy prices. While there is no direct link between the two, the domestic price cap generally reflects what is happening in the wider wholesale energy market – and that is relevant to businesses too.
The domestic price cap has increased
Ofgem’s latest price cap came into effect on 1 October 2026, increasing by around 4%.
For a typical household paying by Direct Debit for gas and electricity, the annualised cap has increased from £1,663 to £1,723.
The current average capped rates are:
Electricity: 26.32p per kWh
Gas: 7.97p per kWh
Plus daily standing charges
The actual amount a household pays will depend on how much energy it uses, its location, meter type and payment method.
And this may not be the end of the increases.
Current market forecasts are pointing towards a further increase when the next price cap takes effect on 1 January 2027. Some forecasts are currently suggesting a rise of around 20%, although this is not yet confirmed and could change considerably before Ofgem announces the official figure on 25 November.
So what does this have to do with businesses?
This is where it is important to understand the difference.
There is no energy price cap for business energy.
Businesses do not have the same protection as households on standard variable tariffs. Your business energy costs are determined by your contract, supplier, wholesale market prices and the various other costs that make up an energy bill.
So, if you see a headline saying:
“Energy price cap set to rise”
you shouldn’t assume your business electricity or gas price will rise by the same percentage.
However, the price cap is calculated using underlying energy costs, including wholesale market costs. Therefore, movements in the price cap can provide an indication of what is happening in the wider energy market.
Why we pay attention to the market at Energy Smart
This is one of the reasons we don’t believe businesses should simply wait until their current energy contract is coming to an end before thinking about their next contract.
The wholesale market is constantly moving.
If wholesale prices rise, suppliers will generally reflect those increases in the prices they offer businesses. Equally, when the market falls or becomes more stable, there can be opportunities to secure better pricing.
This is where having an energy consultant watching the market can make a real difference.
Our job at Energy Smart isn’t simply to obtain a price when a contract is due for renewal.
We watch the market and advise our clients when we believe it is worth considering securing their future energy costs.
Sometimes that means recommending that a client waits.
Sometimes it means telling them that the market has moved to a level where securing a contract makes sense.
And sometimes the most important advice is simply not to panic because of a headline about the domestic price cap.
The important message for our business clients
The domestic price cap is useful as a market indicator, but it should not be used as a direct comparison with business energy prices.
A business using 150,000 kWh a year, for example, has a very different energy requirement from a typical household, and its pricing will be based on a completely different commercial market and contract structure.
What matters is what is happening to the wholesale market when your business needs to purchase its next contract.
That is why we encourage our clients to keep us involved throughout the life of their energy contracts rather than only contacting us when their renewal date arrives.
Don’t wait for the headlines
Energy prices can move quickly, and by the time a major increase is being reported in the mainstream press, the wholesale market may have already moved.
At Energy Smart Consultancy, we want our clients to have the information they need to make sensible decisions about when to purchase.
The domestic price cap may not apply to your business – but the market behind it is something we are watching every day.
If your business has an upcoming renewal, or you simply want to understand where the market is heading, speak to the Energy Smart Consultancy team.
Good energy purchasing isn’t about guessing where prices will go. It’s about understanding the market and making informed decisions at the right time.
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