The Energy Price Cap helps protect households from high energy prices.
Ofgem sets the cap. Ofgem is the energy regulator for Great Britain.
The cap applies to many standard variable and default tariffs in England, Scotland and Wales.
However, there is one important point:
The Energy Price Cap does not cap your total energy bill.
Instead, it limits the rates your supplier can charge.
What Does the Price Cap Limit?
The cap mainly controls:
Unit rates – the price you pay for each kilowatt-hour (kWh) of gas or electricity.
Standing charges – the daily charge for having an energy supply.
Therefore, your bill still depends on how much energy you use.
Use more and you will usually pay more. Use less and you will usually pay less.
Why Is There an Annual Price Cap Figure?
You may hear the Energy Price Cap described as an annual amount.
For example, the cap may be shown as £1,862 a year.
However, this is not a limit on your bill.
Instead, it shows what a typical household would pay at the capped rates. It is based on set levels of energy use.
Therefore, your own bill may be higher or lower.
A Simple Example
Suppose electricity costs 25p per kWh.
If you use 2,000 kWh:
2,000 × 25p = £500
However, if you use 4,000 kWh:
4,000 × 25p = £1,000
The price per unit is the same. The cost is higher because more electricity was used.
You also need to add the standing charge.
So, the cap limits prices rather than total bills.
Who Does the Price Cap Protect?
The cap mainly covers homes on standard variable and default tariffs.
It can apply if you pay by:
- Direct Debit
- standard credit
- prepayment meter
However, your rates can vary by area, meter type and payment method.
What About Fixed Tariffs?
Fixed tariffs work differently.
With a fixed tariff, you agree to certain rates for a set time.
Therefore, your rates do not normally change when the Energy Price Cap changes.
This can give you more certainty.
However, a fixed tariff is not always cheaper.
So, compare the:
- unit rates
- standing charges
- contract length
- exit fees
Also, check any other terms before you switch.
How Often Does the Price Cap Change?
Ofgem reviews the cap every three months.
The periods are:
January to March
April to June
July to September
October to December
Therefore, prices on affected variable tariffs can change four times a year.
Why Does the Price Cap Change?
Many costs affect energy prices.
For example, suppliers have to buy gas and electricity. They also have to pay other costs.
These include:
- wholesale energy costs
- network costs
- running costs
- energy scheme costs
- VAT
Therefore, the cap can rise when these costs increase.
Likewise, it can fall when costs decrease.
Why Do Wholesale Prices Matter?
Suppliers buy gas and electricity from wholesale markets.
So, higher wholesale prices can increase the cost of supplying energy.
However, the effect is not always immediate.
Suppliers often buy energy in advance. Therefore, today’s wholesale prices do not always lead to an immediate change in household bills.
Are Rates the Same Everywhere?
No.
Energy rates can vary across England, Scotland and Wales.
For example, network costs differ between areas.
Therefore, the rates shown in the news may not be exactly the same as the rates on your tariff.
Always check your own bill or tariff details.
Does the Way You Pay Matter?
Yes.
Rates can vary depending on how you pay.
For example, different rates may apply to:
Direct Debit
Standard credit
Prepayment meters
Therefore, national average rates should only be used as a guide.
What About Economy 7?
Economy 7 has different electricity rates for different times of day.
Usually, electricity is cheaper during set off-peak hours.
The Energy Price Cap can still apply.
However, Economy 7 rates will not normally match the single electricity rate shown in news reports.
Therefore, check both your day and night rates.
What Is the Current Energy Price Cap?
For 1 July to 30 September 2026, the headline Energy Price Cap is £1,862 a year for a typical household paying by Direct Debit.
Average Direct Debit rates are:
| Unit rate | Standing charge | |
|---|---|---|
| Electricity | 26.11p/kWh | 57.19p/day |
| Gas | 7.33p/kWh | 29.04p/day |
These rates include VAT.
However, they are averages. Your own rates may be different.
Also, the cap changes every three months. Therefore, check the latest rates when comparing tariffs.
What Happens When the Cap Changes?
Your rates may change when a new cap starts.
If rates rise, your energy may cost more.
On the other hand, if rates fall, you may pay less.
Your supplier should tell you about changes to your tariff.
Does the Price Cap Guarantee the Cheapest Deal?
No.
The price cap gives you some protection from high rates. However, cheaper tariffs may be available.
For example, you may find:
- fixed tariffs
- time-of-use tariffs
- EV tariffs
- Economy 7 tariffs
Therefore, it can still be useful to compare energy deals.
Should You Fix Your Energy Prices?
This depends on your needs.
A fixed tariff can give you more certainty. In contrast, a variable tariff can change when the price cap changes.
Therefore, compare the full cost before deciding.
Look at the unit rates and standing charges. Also, check the contract length and exit fees.
Most importantly, use your own energy use when comparing deals.
How Can You Estimate Your Energy Costs?
You can use your own yearly energy use.
For electricity:
Yearly use × unit rate
Then add:
Standing charge × 365
Next, do the same for gas.
Finally, add the two totals together.
This gives you a better estimate than using the headline price cap figure.
What About Your Direct Debit?
Your Direct Debit is not the same as your energy bill.
For example, you may use more energy in winter. However, your supplier may spread the cost across the year.
Therefore, your account may sometimes be in credit or debit.
To understand your costs, check your:
- meter readings
- energy use
- unit rates
- standing charges
- account balance
These figures give you a clearer picture.
Does the Price Cap Apply to Businesses?
No.
The domestic Energy Price Cap does not cover business energy in the same way.
Business contracts have different rules and terms.
Therefore, businesses should not use the domestic price cap to work out their energy costs.
What Should You Remember?
There are three main points:
The Energy Price Cap limits energy rates, not your total bill.
Your bill still depends on how much energy you use.
The headline annual figure is only an example.
Therefore, check your own unit rates, standing charges and energy use.
These figures will give you a much clearer idea of what your energy really costs.