Business Energy Guide
Do business energy prices go up on 1 October 2026?
Household energy suppliers are now contacting customers about prices from 1 October 2026. If you run a business as well, it is easy to assume the same increase applies to your commercial electricity or gas.
The short answer is no, not automatically.
The Ofgem energy price cap applies to domestic default tariffs. It does not apply to business energy contracts.
If your business is already in a fixed energy contract, the October domestic price cap change does not simply replace the business rates you agreed.
If your fixed contract has ended, or your business is on a variable, out of contract or deemed rate, it is worth checking what you are actually paying because business energy does not have the same domestic price cap protection.
Last checked:
Does the October energy price change affect my business?
| Contract type | Does the domestic price cap apply? | What does 1 October mean? |
|---|---|---|
| Fixed business energy contract | No | The domestic price cap change does not automatically alter the business rates you agreed. Check your contract for any variable or pass through elements. |
| Variable business energy rate | No | The domestic 4% increase does not set your business rate. Check your current unit rate and standing charge and compare available fixed options. |
| Out of contract business energy | No | Your rates are not protected by the domestic price cap. Check exactly what you are paying. |
| Deemed business energy contract | No | Do not assume the household price cap limits the supplier's deemed business rates. Check the actual tariff applying to the supply. |
| Domestic standard variable tariff | Yes, where the tariff is covered by the cap | The maximum unit rates and standing charges change for the new cap period. |
| Domestic fixed tariff | No | The price cap rise itself does not replace the agreed fixed tariff. The temporary electricity VAT reduction still applies where relevant. |
What is actually changing on 1 October 2026?
From 1 October to 31 December 2026, Ofgem's domestic energy price cap increases by 4% for a typical household paying by Direct Debit for electricity and gas.
The illustrative annual figure rises from £1,663 to £1,723.
That does not mean households have a £1,723 maximum bill. The figure shows what a typical household would pay at the capped rates using Ofgem's typical consumption assumptions. Customers using more energy can pay more. Customers using less energy can pay less.
Average Direct Debit rates from 1 October 2026
Electricity
Gas
These are averages across England, Scotland and Wales. Actual rates vary by region, meter and payment method.
None of those domestic capped rates becomes the maximum rate for a business energy contract.
I have received a home energy letter. Does it change my business contract?
A household energy price change letter normally relates to the domestic account and tariff identified in that communication.
It does not automatically alter a separate business energy contract.
You could even use the same supplier group for your home and business and still have two completely separate contracts with different rates, terms and end dates.
Before assuming your business price is changing, check which account the letter refers to.
- Which account the letter refers to
- Whether it is labelled domestic or business
- Tariff name
- Supply address
- Contract dates
- Current business bill
Why doesn't the energy price cap apply to my business?
Domestic and business energy are separate contractual markets.
Ofgem's price cap protects eligible household customers on default tariffs. Ofgem specifically excludes customers with a business energy contract from that protection.
The new household price cap does not become the price cap for your shop, farm, pub, office or other business premises.
The electricity may ultimately come through the same energy system, but the contract paying for your home and the contract paying for your business are separate agreements.
A business energy contract has its own supplier, contract dates, unit rates, standing charges, meter details, terms, and renewal position.
Which situation is your business in?
My business is fixed
The October household price cap does not automatically replace your agreed business rates.
Check your contract end date and whether you have received any separate business price or charge notice.
My fixed contract has ended
Check your latest business bill now.
Depending on the contract and supplier, the supply may have moved onto a variable or out of contract rate. The domestic price cap does not protect that business tariff.
I know I am on a variable business rate
Do not apply the household 4% increase to your business rate.
Check the unit rate and standing charge you are actually paying and compare them with the business options currently available for your supply.
I have no idea what tariff I am on
Start with your latest business energy bill.
Check the tariff name, unit rate, standing charge and contract end date. If it is still unclear, ask the supplier to confirm the contract status in writing.
I have a fixed business energy contract. Are my rates going up?
The October domestic price cap change does not automatically alter an existing fixed business energy contract.
The agreed business contract still governs the supply.
Customers should check:
- Unit rate
- Standing charge
- Contract start date
- Contract end date
- Whether pricing is fully fixed
- Whether the terms contain any variable or pass through charges
- Whether they have received a separate business supplier variation notice
A separate change to a charge under the terms of a business contract should be assessed against that contract. It should not simply be assumed to have happened because the domestic Ofgem price cap changed.
My business is on a variable rate. Should I be worried about 1 October?
The domestic price cap does not control a business variable rate.
So the important question is not whether your business price is going up by 4%. The important question is what your business is already paying and whether that rate remains competitive.
Find out:
- Current electricity or gas unit rate
- Current standing charge
- Contract status
- Previous contract end date
- Annual consumption
- Any recent supplier price notice
Then compare available fixed business options.
A business variable tariff could rise, fall or remain unchanged independently of the domestic October price cap.
What we actually check
When a business owner asks us whether an energy price announcement affects them, we do not start with the headline percentage.
We check the latest business bill, the contract end date, the unit rate and the standing charge.
Those details tell us far more about the position of that particular business than the domestic price cap announcement.
We have seen businesses assume they are still fixed when the original contract has already ended.
We have also seen customers worry about a household price announcement when their business contract is already fixed beyond the change date.
What does VBR mean?
VBR is commonly used to mean Variable Business Rate. Some suppliers use different terminology.
Customers may move onto variable rates after a fixed contract ends, depending on the supplier and contract.
Out of contract and deemed rates
Out of contract
A business may move onto rates specified by its previous contract after the fixed term ends.
Deemed contract
A deemed contract can arise where energy is being supplied without an expressly agreed contract in circumstances covered by the non-domestic deemed contract framework.
Neither should be assumed to receive protection from the domestic energy price cap. Variable, out of contract and deemed are not automatically identical terms.
My business contract expires soon. Should I wait until 1 October?
Not because of the domestic price cap.
The 1 October date is relevant to domestic capped tariffs. Business prices are quoted separately.
A business nearing renewal should compare the actual commercial offers available for its own supply rather than waiting for a domestic price cap date.
Factors to consider:
- Current rate
- Contract end date
- Annual consumption
- Meter type
- Payment method
- Available supplier prices
- Contract length
- Contract terms
Are business energy prices going up too?
The domestic price cap increase does not tell you what is happening to your individual business tariff.
Domestic capped prices and commercial contract prices are separate. They can both be affected by some of the same wider costs, including wholesale energy markets, but they are not priced through the same tariff mechanism and they do not have to move by the same percentage or on the same date.
Domestic prices rising 4% does not mean business prices rise 4%.
Does the 0% electricity VAT change apply to my business?
From 1 October 2026 to 31 March 2027, electricity that qualifies for the reduced 5% VAT rate moves temporarily to 0% VAT.
This includes domestic electricity. It also includes small businesses, charities and residential care homes that already qualify for the reduced 5% VAT treatment on electricity.
It does not mean every business electricity bill becomes VAT free.
If a business currently qualifies for reduced rate VAT, it should check that its supplier has the correct VAT declaration or eligibility information.
If a business currently pays standard rate VAT, the October change does not automatically reduce it to zero.
Some small businesses that already qualify for the reduced 5% VAT rate on electricity will also benefit from the temporary 0% electricity VAT rate from 1 October 2026 to 31 March 2027.
VAT and Climate Change Levy are separate issues. This page does not provide detailed tax advice.
How do I know if my business energy is fixed or variable?
Look on the latest business bill for:
- Tariff or product name
- Contract end date
- Unit rate
- Standing charge
- Fixed term wording
- Variable rate wording
- Out of contract wording
- Deemed rate wording
- Recent price notices
If unclear, send this to your supplier:
Please confirm the current status of my business energy supply. Can you confirm whether I am currently on a fixed contract, variable business rate, out of contract rate or deemed contract? Please also confirm my current unit rate, standing charge, contract end date and any other charges that can vary.
Use your business bill, not the headline
If you want to know whether your business energy price is changing, look at your business contract and latest bill rather than assuming a household energy headline applies to you.
The four things we would check first are:
- 1Current unit rate
- 2Current standing charge
- 3Contract end date
- 4Annual usage
Once we know those, we can tell whether the business is already properly fixed or whether it is sitting on a variable or out of contract rate that is worth reviewing.
Real world examples
My home price is increasing but my business is fixed
A business owner receives a household supplier letter saying their domestic prices are changing from 1 October. Their business electricity supply is separately fixed until June 2027. The October domestic price cap does not replace the agreed business rates. The sensible action is to keep the business contract details and check whether any separate business variation notice has been issued.
My home price is increasing and my business is on VBR
A business owner receives the same type of household letter and checks the latest business electricity bill. Their previous fixed contract has already expired and the supply is now on a variable business rate. The domestic 4% rise does not determine the business rate. But the bill now needs checking because there is no domestic price cap protecting that business tariff. The customer should compare the current variable rate against available fixed business prices.
My business is fixed but I have received a separate price change notice
A business has a fixed supply agreement but receives a separate business notice telling it that a particular charge is changing. The Ofgem domestic price cap did not cause this. Check the business contract. Some business contracts allow particular components to change even while other elements remain fixed. The correct question is what the contract says about that charge.
What should my business do before 1 October?
Fixed business customer
- Do not be alarmed by a household energy letter.
- Check your contract end date.
- Check whether you have received any separate business price notice.
- Keep renewal dates under review.
Variable business customer
- Check unit rate.
- Check standing charge.
- Check annual consumption.
- Check available fixed options.
Out of contract customer
- Review the account now.
- Do not assume the domestic cap limits the price.
Business contract expiring soon
- Compare genuine business renewal prices.
- Do not wait for 1 October purely because the domestic cap changes then.
Not sure what you are on
- Start with your latest business energy bill.
Frequently asked questions
Do business energy prices go up on 1 October 2026?▾
Not automatically. The October change is to Ofgem's domestic energy price cap. Business energy contracts are separate and are not protected by the domestic cap.
Does the Ofgem price cap apply to business energy?▾
No. Ofgem specifically states that customers with business energy contracts are not protected by the domestic price cap.
My home energy is going up. Will my business electricity go up too?▾
Not simply because your home tariff changes. Check the separate business contract and tariff.
I use the same supplier at home and at work. Will both prices change?▾
Not necessarily. The accounts can still be on completely separate domestic and business contracts.
Will my fixed business electricity rate change on 1 October?▾
The domestic cap change itself does not automatically alter your business contract. Check your contract for any separately variable or pass through charges.
Can a fixed business energy contract ever increase?▾
Some contracts contain charges that can change under their terms. Do not assume every component is fixed without checking the contract.
What if my business is on a variable rate?▾
The domestic price cap does not protect the business tariff. Check the current rate and compare available fixed contracts.
What is a business VBR?▾
VBR commonly means Variable Business Rate. Supplier terminology can differ.
Are business variable rates capped by Ofgem?▾
Not by the domestic energy price cap.
What is an out of contract business energy rate?▾
It is generally a rate applying after a previous contractual arrangement ends, depending on the supplier and contract terms.
Is an out of contract rate the same as a deemed contract?▾
Not necessarily. Do not treat the terms as automatically identical.
Should I fix my business energy before 1 October 2026?▾
Do not make the decision based solely on the domestic price cap date. Compare the actual business rates and contract terms available for your supply.
Does the October 2026 electricity VAT cut apply to businesses?▾
It applies to qualifying small businesses, charities and residential care homes that already qualify for the reduced 5% VAT rate on electricity. It does not mean every commercial electricity bill becomes VAT free.
When does the temporary 0% electricity VAT rate end?▾
31 March 2027.
How can I tell whether my business energy is fixed?▾
Check the tariff name, rates, contract end date and wording on your latest bill or ask the supplier to confirm your contract status in writing.
Related guides
Not sure whether the October price changes affect your business?
Send us your latest business electricity or gas bill.
We can check whether the supply is fixed, variable, out of contract or deemed, identify the rates you are paying and tell you whether there is actually anything you need to do.
If the business is already properly fixed, we will tell you. If it is sitting on a variable or out of contract rate, we can then compare the fixed options available.