Ofgem's October 2026 Price Cap: Does It Ever Apply to a Business Energy Meter?

The numbers your customers have read about

On 26 August 2026 Ofgem confirmed the price cap for 1 October to 31 December 2026. For a typical household paying by direct debit for gas and electricity it rises 4% to £1,723 a year, up £60 from £1,663 (Ofgem press release). Standard credit goes to £1,861, prepayment to £1,678, and Economy 7 on direct debit to £1,046, a rise of about 1% (Ofgem summary of changes). The average capped electricity unit rate is 26.32p/kWh with a standing charge of 54.83p a day (Ofgem). The next announcement lands on 25 November 2026, covering January to March 2027.

Those figures took effect on 1 October and cover roughly 22 million households on default tariffs. That is the whole scope: domestic premises, domestic supply contracts, standard variable or deemed domestic terms. There is no equivalent number for a shop or a workshop.

Does the cap ever reach a business meter?

Short answer: no. The edge cases people ask about do not change it, because the cap limits the rates a supplier can charge under a domestic supply contract. Four situations come up every autumn.

Sole traders working from home. If the property is a home, the meter sits on a domestic contract and the tariff is the supplier's default, the cap applies in the ordinary way. Claiming part of the bill as a business expense on a tax return has no effect on the supply contract. The trap runs the other way: a sole trader talked onto a non-domestic contract for a domestic property loses cap protection and has usually gained nothing for it.

Mixed-use premises. A flat above a shop with one meter is settled as one supply. Suppliers generally treat predominantly domestic use as domestic and predominantly business use as non-domestic. Where use is genuinely split, VAT follows actual use, with the reduced rate applying to the qualifying domestic proportion; the low-usage de minimis for small business electricity supplies also picks up reduced rate treatment. The temporary zero rate on qualifying electricity supplies in Great Britain runs from 1 October 2026 to 31 March 2027, with Northern Ireland staying at 5% (ICAEW). So a mixed-use meter may pick up that VAT change while remaining entirely outside the price cap.

Landlords. Supply to common parts, a landlord's boiler room or a communal laundry is a non-domestic contract in the landlord's name, so it is not capped. Tenants who pay their own supplier directly are capped as normal. Residents buying heat through a communal or district network sit under a separate regime, Ofgem's heat network rules, rather than the price cap (Ofgem heat networks).

Profile class 1 and 2 meters on a commercial contract. This is the one that causes arguments. Profile classes are a settlement convention: class 1 is domestic unrestricted, class 2 is domestic Economy 7, and classes 3 to 8 are used for non-domestic supplies (Elexon). Plenty of small business meters still sit in class 1 or 2 because the site was once a house or the data was never corrected. That label does not create price cap protection. What decides the point is the contract the customer signed and whether the premises are domestic. A class 1 meter on a signed non-domestic supply contract is a business supply.

What does govern SME deemed, out-of-contract and rollover rates

Business customers are not unprotected, but the protection is conduct-based rather than price-based.

• Microbusiness status. Ofgem's definition covers a non-domestic customer with fewer than ten employees and turnover or balance sheet of no more than €2 million, or annual use of 100,000 kWh of electricity or less, or 293,000 kWh of gas or less. Meeting one limb is enough (Ofgem).
• Deemed contract terms. Where a customer takes supply without an agreed contract, after moving in or after a contract ends, the supplier must not set terms that are unduly onerous. Ofgem has pressed suppliers to keep deemed and out-of-contract rates from sitting far above what a comparable contracted customer would pay. That is a reasonableness test, not a published ceiling, so a deemed rate of two or three times a fixed price is challengeable on its facts rather than automatically unlawful.
• No lock-in on deemed supply. A customer on a deemed contract can switch at any time without termination fees or notice periods.
• Disclosure. Broker commission and other third-party costs must be disclosed in the contract for non-domestic contracts signed since 1 October 2024, for customers of any size, alongside principal terms given before and after signature.
• Rollovers. Automatic rollover onto a further fixed term is heavily restricted for microbusinesses, and contract end dates plus a statement of renewal terms must be given in writing.

Redress matters too. Microbusinesses, and small businesses within the widened eligibility criteria, can take an unresolved complaint to the Energy Ombudsman eight weeks after raising it or on receipt of a deadlock letter. Larger SMEs cannot, so check eligibility before promising a route.

Why the cap's inputs do not become your winter quote

The cap and a non-domestic fix are built from the same raw materials and assembled differently. Both start from forward wholesale gas and power, and both carry network and policy costs. After that they part company.

Ofgem sets the cap using a fixed observation window of forward prices, applied to typical domestic consumption and refreshed quarterly. A business fix is priced against the curve on the day of the quote, shaped to the customer's own load profile, with a credit assessment and a term of one to five years. October's 4% rise was driven mainly by gas, with the electricity element barely moving, and the headline already absorbs the temporary zero rate of VAT, which Ofgem estimated was worth roughly £45 on the annual figure. Business electricity carries VAT at 20% for most sites and Climate Change Levy on top, so that relief never reaches them. Policy costs sit differently as well: domestic bills carry a set of levies that non-domestic customers meet through other routes, and network charges vary by distribution area and voltage rather than by a single national average.

So a broker can honestly tell a customer that a 4% domestic increase and a 15% jump in their own renewal quote are both accurate. Different windows, different volumes, different taxes.

Handling the call

A script that works: "The cap you have seen is a domestic rate limit that changes every three months. Your supply is a business contract, so it is priced from the wholesale market on the day we agree it, and then it is fixed. What protects you is the contract terms and the rules on deemed rates, not a capped price. Here is your current rate, here is what the market is offering today, and here is the date your notice has to be in."

Three checks before you make that call:

• Meter and contract. Pull the MPAN profile class and the supply contract type together. A class 1 or 2 meter on a business contract needs explaining up front, and a genuinely domestic premises on a non-domestic contract needs correcting rather than renewing.
• What rate they are actually on. Separate fixed, out-of-contract, deemed and rolled-over. Deemed customers can move immediately; out-of-contract customers may have notice terms; a rollover may be challengeable if the renewal notice was defective.
• Redress route. Confirm microbusiness status against the employee, turnover and consumption limits, then confirm current Energy Ombudsman eligibility before telling a customer they have one.

One last diary note: 25 November 2026 brings the January cap announcement, and the same questions will arrive the week after.