To coincide with the fall in the July Default Tariff Cap (price cap), Cornwall Insight has released new forecasts for the October 2025 cap. The October cap is forecast to fall to £1,698 a year for a typical dual fuel consumer1, £22 lower than the July 2025 cap of £1,720 and a slight decrease on the prediction released in May. Although a drop of just 1%, the forecast offers some relief to households, but there remains significant uncertainty with just under two months until the final figure is announced.
Over the past few weeks’ international tensions in the Middle East saw wholesale energy prices rise, with our price cap forecast reaching a peak of £1,777 on 19 June. As the military tension has eased, the wholesale market has fallen – a fact which, coupled with updates to our forecasts of non-wholesale costs, is reflected in our latest outlook for the cap.
While the slight fall in predictions is welcome, the cap still remains hundreds of pounds above pre-pandemic prices, even when adjusting for inflation. Furthermore, there is little indication that prices will reduce substantially over the next few years.
Looking to 2026, Cornwall Insight predict a further small fall in January, with prices rising slightly in April. However, market volatility, geopolitical risks, and potential changes – and additions - to non-wholesale cost parts of bills mean forecasts remain subject to change.
Figure 1: Cornwall Insight’s Default Tariff Cap Forecast Based on Typical Domestic Consumption, and Per Unit Costs and Standing Charge Values (dual fuel, direct debit customer)
| Quarterly | Oct - Dec (Q4 2025 TDCV Forecast | Standing Charge (£/per day) | Per Unit Cost (p/kWh) |
| Electricity (2,700 kWh) | £894.61 | 0.51 | 26.17 |
| Gas (11,5000 kWh) | £802.93 | 0.30 | 6.02 |
| Total | £1,697.55 |
Source: Cornwall Insight’s Default Tariff Cap Forecast Service
Note: All figures are national average unless otherwise stated. All intermediate and final calculations are rounded to two decimal places. Totals may not add due to rounding.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight:
"While any reduction in energy bills is welcome, we must not let small fluctuations in the price cap mask the bigger picture. Households are still paying far more for their energy than they were before the pandemic, with the current outlook showing little prospect of a meaningful drop over the next few years.
“Our reliance on international energy markets means that while we have a range of supply sources, this brings with it a vulnerability to global events and price shocks – something that was evident in June. If we want to bring real stability and affordability to the energy system, we need to continue, and speed up, our transition to homegrown, renewable power.
“This transition will not happen overnight, and there will be short-term costs along the way. However, in the long-term, building a more self-sufficient energy system is the only way to help shield consumers from international volatility and put us on a more secure and sustainable path for the future."
Reference:
1. Ofgem’s Typical Domestic Consumption Values (TDCVs), are set at 2,700 kWh per annum for electricity, and 11,500 kWh per annum for gas.
Notes to Editors
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About the Cornwall Insight Group
Cornwall Insight is a leading provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Great British and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.
