October's price cap: what it means for air conditioning costs

Ofgem has raised the energy price cap by 4% for October to December 2026, taking a typical dual-fuel household from £1,663 to £1,723 a year. Almost all of that rise is gas. Electricity, which is what air conditioning runs on, is close to flat, because the government removes the 5% VAT from electricity bills on exactly the same day the new cap begins.

In Ofgem's own words, "most of the increase in the price cap is driven by higher gas costs, with gas bills rising by 8%, meaning that households which do not use gas will see a much smaller increase of less than 1%."

Air conditioning is all-electric. It sits on the right side of that split.

What was announced

From 1 October to 31 December 2026, the cap sets electricity at 26.32p per kWh with a standing charge of 54.83p per day, and gas at 7.97p per kWh with a standing charge of 29.68p per day. These are direct debit averages for England, Scotland and Wales.

The electricity figures carry no VAT. The government has removed VAT from domestic electricity for six months, from 1 October 2026 to 31 March 2027. Gas keeps its 5%.

That is the whole story in one line: the thing you cool your home with got a tax cut, and the thing most people heat their home with did not.

Two things most of the coverage will get wrong

The unit rate comparison is not like for like. Today's 26.11p per kWh includes 5% VAT. October's 26.32p does not, because there is no VAT to include. Set side by side, the rate rises 0.8%. But strip VAT out of both and the underlying rate has gone from 24.87p to 26.32p, a rise of 5.8%. Had VAT stayed at 5%, you would be paying about 27.64p from October. The tax cut is absorbing almost the entire increase, and it expires on 31 March 2027.

The annual figure you remember from May is the wrong one. When the July cap was announced, the headline number was £1,862. Ofgem then revised its assumptions about how much energy a typical household uses, cutting the benchmark from 2,700 to 2,500 kWh of electricity and from 11,500 to 9,500 kWh of gas. On that new basis the July cap is £1,663, which is what October's £1,723 is measured against. The £1,663 to £1,723 comparison is sound. Comparing £1,862 to £1,723 and calling it a fall is not.

One smaller note: £1,663 to £1,723 is a rise of 3.6%. The 4% is Ofgem's own rounding.

What it does to cooling costs

Below are our standard running-cost scenarios at the old rate, the new rate, and what the new rate would have been had VAT not been removed. The method is the one behind our running cost calculator: average power draw multiplied by hours of use, at a 60% compressor duty cycle.

A penny a day. For cooling, this cap is a non-event, and that is the point: in a quarter where the typical household is paying £60 more a year, running a portable air conditioner costs about 1% more than it did.

The bigger change is for heating

October to December is not cooling season. It is heating season, and this is where the VAT cut actually bites, because most modern wall-mounted splits are reverse cycle and heat as well as they cool.

A reverse-cycle unit with a SCOP of around 4 delivers four units of heat for every unit of electricity. At the new rate that is heat at roughly 6.6p per kWh. A 90%-efficient gas boiler burning gas at 7.97p delivers heat at roughly 8.9p per kWh.

The margin in favour of reverse-cycle heating was 1.6p per kWh of heat. From October it is 2.3p. Electricity used to cost about 3.6 times the unit price of gas; from October it is about 3.3 times. That shift is small in absolute terms but it moves in one direction only, and it moves the break-even point. At a SCOP of 3.5, which used to be roughly line-ball with gas, a reverse-cycle unit is now clearly ahead.

The usual caveats still apply. Real-world efficiency falls in hard frost, whole-home heating is a different calculation from taking the chill off one room, and none of this is an argument for ripping out a working boiler. But if you already have a reverse-cycle unit sitting idle through the winter, it is cheaper to run this quarter than it was last quarter, and cheaper relative to your boiler than it has been.

Our guide to air conditioning versus a heat pump covers how the two compare, and is air conditioning worth it puts the year-round numbers together.

One note on our figures

Until 30 September, 26.11p is still what you pay, so the running-cost figures across our guides and calculators stay as they are until then. On 1 October, when the new rate takes effect, we update every one of them in a single pass. If you are reading this after 1 October, the guides already reflect the new rate.

Analysis by Aircon Adviser. Rates from Ofgem, correct as of 26 August 2026. Free to reproduce with a link to this page.