UK Energy Price Cap: What It Means for Your Home Energy Bills

The energy price cap at a glance

• It limits unit rates (pence per kWh) and standing charges (pence per day) for default tariffs.
• It is reviewed and set quarterly (January–March, April–June, July–September, October–December).
• Your usage determines your total bill; the cap is not a cap on the overall amount you can be charged.
• Rates can vary by region, meter type (single rate/Economy 7), and payment method (e.g., Direct Debit, prepayment).
• Fixed-rate tariffs are not limited by the cap, but must comply with consumer protection rules.

How the price cap works

Ofgem calculates the cap using an independent methodology that reflects the allowed costs of supplying energy. These include wholesale energy costs, network charges, policy and environmental schemes, operating costs, a small margin, and VAT. Because wholesale markets change, the cap is updated every three months.

What the cap limits

• Unit rate: the price per kilowatt-hour (kWh) of electricity or gas you consume.
• Standing charge: a daily fee that covers the fixed costs of supplying your home, regardless of how much energy you use.

Suppliers cannot charge more than the cap for these elements on default tariffs, though your precise rates depend on where you live and how you pay.

Who the cap applies to (and who it doesn’t)

Covered

• Households on a standard variable or default tariff with a licensed supplier in Great Britain.
• Customers with prepayment meters and credit meters on default tariffs.
• Smart meter customers on default tariffs.

Not covered

• Fixed-rate tariffs (prices are set for a fixed term).
• Businesses and non-domestic premises.
• Northern Ireland homes (different regulatory arrangements).

Recent price cap timeline

The headline figures below show what a typical household might pay over a year if they use Ofgem’s Typical Domestic Consumption Values (TDCV) and pay by Direct Debit. Your actual costs will vary based on your usage, region, and tariff.

Assumptions: Ofgem TDCV (e.g., around 2,700 kWh electricity and 11,500 kWh gas per year). Figures shown are indicative and for Great Britain only. Always check the latest cap with Ofgem or your supplier.

See current rates and methodology on Ofgem.gov.uk

How your actual bill is calculated

Your bill is based on your individual energy use and the rates for your area and tariff. In simple terms:

Total bill = (Electricity unit rate × kWh used) + (Gas unit rate × kWh used) + (Standing charge × number of days) + VAT

• Regional differences: Network costs vary, so capped rates differ by region.
• Payment method: Direct Debit, prepayment, or pay-on-bill can have different capped rates.
• Meter type: Single-rate and Economy 7/Economy 10 have different day/night unit rates.

Ways to save under the price cap

• Check your tariff: If you prefer certainty, a fixed tariff (when available) can protect against future rises but may sit above or below the cap depending on market conditions.
• Submit regular meter readings (or use a smart meter) so you’re billed for actual, not estimated, usage.
• Reduce energy waste: Lower your flow temperature on condensing boilers, draught-proof, insulate lofts, and switch to LED lighting.
• Shift usage off-peak if you have Economy 7 or time-of-use tariffs to benefit from cheaper night rates.
• Pay by Direct Debit if it’s suitable for you, as capped rates can be lower than other payment methods.
• Review appliances: Maintain heating systems and upgrade to efficient white goods over time.

Help if you’re struggling with your energy bills

• Talk to your supplier early: Affordable payment plans and practical support may be available.
• Priority Services Register: Free extra help if you’re in a vulnerable situation (eligibility applies).
• Warm Home Discount: If eligible, you may receive a one-off bill credit during winter (scheme rules apply).
• Grants and advice: Check local authority schemes and independent advice services.
• Energy saving guidance: See GOV.UK energy efficiency advice and Ofgem’s consumer guidance.

If you’re a customer and need support, please contact our team. We’re here to help.

Energy price cap FAQs