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The UK energy price cap is the maximum rate that energy suppliers can charge households for each unit of gas and electricity. It doesn't cap your total bill — it caps the price per unit. Use more energy, pay more.
Right now, the cap sits at £1,663 a year for a typical dual-fuel household paying by direct debit (July–September 2026) — a modest 1.3% rise on the previous quarter. But bigger news just landed: Ofgem has confirmed the cap will rise again to £1,723 a year from 1 October, a 4% (£60/year, roughly £5/month) increase.
This guide explains what the cap is, who it covers, and how Ofgem calculates it.
What is the UK energy price cap?
The energy price cap is the maximum amount energy suppliers can charge you for each unit of gas and electricity — measured in pence per kilowatt hour (p/kWh) — and for your daily standing charge, if you're on a standard variable tariff.
It was introduced by Ofgem in January 2019 to protect households on default tariffs from being overcharged.
"What is a price cap?" In this context means a ceiling on the rate, not the bill. If you use more energy than the Ofgem benchmark, you pay more than the headline figure — there's no limit on the total amount.
Throughout this guide, we use "price cap" and "energy price cap" interchangeably.
The price cap applies to standard variable tariffs (sometimes called default tariffs) in England, Scotland, and Wales. Ofgem sets it every quarter based on what it costs suppliers to provide energy — wholesale costs, network charges, operating costs, and a regulated profit margin.
In plain terms, the price cap doesn't protect you from high bills. It protects you from unfair bills. If wholesale energy costs are high, the cap goes up. If they fall, the cap comes down. Your bill moves with your usage, always.
Who does the price cap actually cover?
The cap covers most — but not all — UK households. Here's where you stand:
Covered by the price cap:
- Households on a standard variable tariff (SVT), also called a default tariff, are the most common tariff type in the UK
- Households paying by direct debit, standard credit (on receipt of bill), or prepayment meter — each has a slightly different cap level; the £1,641 figure applies to direct debit customers
Not covered by the price cap:
- Fixed-tariff customers — if you've signed a fixed deal with a supplier, your unit rates are locked in regardless of the cap. That can work in your favour or against you, depending on market direction
- Northern Ireland — Northern Ireland has a separate energy market regulated by the Utility Regulator, not Ofgem. The price cap described on this page does not apply
- Oil and LPG heating — if your home is heated by oil or LPG rather than mains gas, you are not covered by the price cap at all. Oil and LPG prices are set entirely by the market, with no regulatory ceiling. These households — typically in rural areas — face the most volatile energy costs of any group in the UK, and have no price protection when wholesale oil prices spike
That last point matters particularly for rural homeowners. There's no price cap on heating oil.
How does the price cap work?
Ofgem reviews the cap every quarter — effective 1 April, 1 July, 1 October, and 1 January. Each review sets two numbers for gas and electricity, respectively:
- The unit rate — what you pay per kilowatt-hour of energy you actually use (in pence per kWh)
- The standing charge — a fixed daily fee you pay simply to be connected to the grid, regardless of usage (in pence per day)
Ofgem doesn't set a single number. It sets a rate structure, and your bill is the product of your usage multiplied by those rates, plus the standing charge across the period.
One aspect that surprises many people: the electricity price cap moves with gas prices — even for your electricity bill. That's because a large share of UK electricity is still generated by gas-fired power stations. When gas is expensive, the cost of generating electricity rises too, and that flows into the cap. You can see this exact dynamic in the October 2026 change: the gas unit rate jumped from 7.33p to 7.97p/kWh, and electricity rates moved up too, even though electricity's own VAT treatment was cut to soften the blow. It's a structural link that solar panels and heat pumps break — one of the strongest arguments for both technologies, which we cover in the final section.
The cap is not a guarantee of the cheapest possible rate. Some fixed tariffs will undercut the cap. Others will be higher. The cap simply sets the maximum a supplier can charge on a default tariff.
What is the current energy price cap?
Current cap period:
1 July – 30 September 2026
| Tariff component | Gas | Electricity |
|---|---|---|
| Unit rate (p/kWh) | 7.33p | 26.11p |
| Standing charge (p/day) | 29.04p | 57.19p |
| Typical annual bill (dual fuel, direct debit) | £1,663 | — |
| Typical monthly equivalent | £138.58 | — |
Confirmed for 1 October – 31 December 2026
Ofgem has announced the cap will rise to £1,723 a year — a 4% (£60/year, roughly £5/month) increase on the current 2026 quarter.
| Tariff component | Gas | Electricity |
|---|---|---|
| Unit rate (p/kWh) | 7.97p | 26.32p |
| Standing charge (p/day) | 29.04p (unchanged) | 54.83p |
| Typical annual bill (dual fuel, direct debit) | £1,723 | — |
| Typical monthly equivalent | £143.58 | — |
Figures are averages across England, Scotland and Wales. From 1 October 2026 to 31 March 2027, VAT on electricity is temporarily removed, while gas remains subject to the standard 5% domestic VAT rate — one reason the electricity standing charge falls even as the overall bill rises. Actual rates vary by region and payment method — check your supplier's tariff for your postcode-specific rate.
Payment method note: Ofgem also publishes separate cap levels for standard credit (pay on receipt of bill) and prepayment meter customers, which are typically higher and lower respectively than the direct debit figure shown here. Check Ofgem's site for the current quarter's exact figures for your payment method.
What's next: The Q1 2027 cap (January–March) will be announced by Ofgem in late November 2026.
How is the price cap calculated?
A typical dual-fuel bill at the cap level breaks down roughly as follows:
Wholesale energy costs (~40%): What suppliers pay to buy gas and electricity on the open market. This is the most volatile component — it moves with global commodity prices and accounts for the majority of cap changes from quarter to quarter. When wholesale gas prices spiked in 2022, this component nearly tripled, driving the cap to unprecedented levels.
Network costs (~25%): The cost of maintaining and upgrading the pipes, cables, and infrastructure that deliver energy to your home. These costs are set by Ofgem under multi-year price control frameworks (currently RIIO-3) and tend to change more slowly than wholesale costs.
Policy costs (~10%): Government-mandated costs passed through bills, including the Warm Home Discount and other social and environmental schemes.
Supplier operating costs (~15%): The costs of running an energy supply business — billing, metering, customer service, smart meter rollout.
Supplier profit margin (EBIT) and headroom (~5%): Ofgem allows suppliers a regulated profit margin and a headroom allowance for unforeseen costs. This is the most politically contentious component — it ensures suppliers remain financially viable, but it means consumers fund a guaranteed return even when wholesale prices are high.
VAT (5%): Normally applied at the reduced rate of 5% on domestic energy — lower than the standard 20% VAT. From 1 October 2026 to 31 March 2027, this is temporarily suspended on electricity only, as a targeted measure to soften the winter cap increase; gas continues to carry the standard 5% domestic rate.
The single biggest lever on your bill — wholesale costs — is also the one you have least control over as a household. Which is exactly why the most durable response isn't tariff-switching. It's reducing how much grid energy you buy.
Price cap vs fixed tariff — what's the difference?
The price cap and a fixed tariff are two fundamentally different things, and confusing them is one of the most common misunderstandings about energy bills.
| Price cap (SVT) | Fixed tariff | |
|---|---|---|
| Rate movement | Changes every quarter with the Ofgem review | Locked for the contract term (usually 12 months) |
| Certainty | Rates move up or down | Predictable — you know your rate for the year |
| Exit fees | None — you can switch at any time | Often £30–£60 per fuel to exit early |
| When it suits you | When fixed rates are higher than the cap | When fixed rates are at or below the cap level |
| Risk | Exposed to quarterly movements | Exposed if wholesale prices fall sharply after you fix |
When fixing makes sense: If wholesale gas prices are rising and fixed tariffs are available below the anticipated future cap level, locking in provides a degree of certainty. The trade-off is that if the cap falls more than expected, you'll pay more than variable customers.
When staying on the cap makes sense: When fixed deals are priced at a significant premium to the current cap — as they sometimes are when suppliers anticipate future rises — staying variable and reviewing each quarter can be cheaper in the short term.
Neither approach escapes the fundamental issue: you're still buying gas and electricity from the grid at whatever price the market sets. For a more durable approach, see our guide on how to beat the energy price cap.
Why is the price cap going up or down?
The short answer: wholesale gas prices.
The longer answer: the cap is a near-real-time reflection of what it actually costs to supply energy in Great Britain. When global energy markets are calm, and gas is plentiful, the cap falls. When supply is disrupted or demand surges, the cap rises — sometimes quickly.
The cap has now risen for two quarters running. It moved from £1,641 in April–June to £1,663 in July–September, and Ofgem has just confirmed a further rise to £1,723 for October–December — a 4% increase. The main driver is rising wholesale gas costs, which pushed the gas unit rate from 7.33p to 7.97p/kWh. Electricity costs rose more modestly, and the temporary removal of VAT on electricity from October helped offset part of the increase — without it, the rise would likely have been steeper.
Looking ahead, the direction of the cap for January–March 2027 depends on how wholesale gas markets move over the coming months, and how the tail end of the VAT change interacts with winter demand. The UK's limited gas storage capacity means there's relatively little buffer between a market movement and a cap change.
For a deeper look at what current market signals suggest for the next cap, see what to do when the price cap rises.
A short history of the price cap
The price cap was introduced on 1 January 2019 — a response to years of evidence that households on default tariffs were systematically paying more than necessary. Before the cap, the gap between the cheapest deal on the market and what a loyal default customer paid could exceed £300 per year.
The cap began its life as a genuine consumer protection measure, keeping typical bills in the £1,100–£1,300 range through 2019, 2020, and the first half of 2021. Then the energy crisis arrived.
Key moments in price cap history:
| Period | Typical annual bill | Notes |
|---|---|---|
| Q1 2019 (cap introduced) | ~£1,137 | First cap — replaces unbounded SVT prices |
| Q1 2021 | ~£1,042 | Near-historic low — pre-crisis |
| Q2 2022 | ~£1,971 | First major crisis spike — +54% in one quarter |
| Q4 2022 | ~£3,549 | Cap without government intervention |
| Oct 2022–Jun 2023 | £2,500 | Energy Price Guarantee replaces cap for most households |
| Q3 2023 | ~£2,074 | EPG removed; cap returns as primary ceiling |
| Q1 2024 | ~£1,928 | Gradual retreat from crisis peak |
| Q3 2024 | ~£1,568 | Lowest post-crisis level |
| Q1 2025 | ~£1,738 | Winter demand + network costs push up |
| Q1 2026 | £1,758 | Modest rise; still 44% above pre-crisis |
| Q2 2026 | £1,641 | Current — down 6.7%, lowest since 2024 |
| Q4 2026 | £1,723 | Confirmed — up 4%; electricity VAT temporarily removed |
Sources: Ofgem quarterly cap announcements, including the August 2026 announcement of the Q4 cap; House of Commons Library CBP-9714 (April 2026).
The key takeaway from this history: the cap is not a stable floor. It has moved by as much as 54% in a single quarter. Households whose only strategy is to track the cap are permanently exposed to that volatility.
Even at today's £1,641 — the lowest level since 2024 — bills remain 35% above their pre-crisis average. The idea that we'll return to 2019 levels is not supported by current forecasts.
Frequently asked questions on the price cap
How is the energy price cap calculated?
Ofgem builds the cap from several cost components: wholesale energy costs (roughly 40% of a typical bill), network and infrastructure charges (around 25%), policy costs like the Warm Home Discount (around 10%), supplier operating costs (around 15%), and a regulated supplier profit margin. Wholesale gas prices are the most volatile component and drive most quarterly changes. Ofgem publishes its full methodology and supporting data each quarter.
Does the price cap mean my bill is capped?
No — and this is the most common misunderstanding about the price cap. The cap limits the unit rate (pence per kWh) and the daily standing charge that suppliers can charge. Your total bill depends on how much energy you actually use. If you use more than Ofgem's "typical household" benchmark, you'll pay more than the headline cap figure. The cap is a rate ceiling, not a spending limit.
Who sets the energy price cap?
Ofgem — the Office of Gas and Electricity Markets — sets the energy price cap. Ofgem is an independent regulator, not a government department. It reviews the cap every quarter and publishes detailed methodology documents explaining how each component is calculated. The cap applies to England, Scotland, and Wales. Northern Ireland has a separate energy market regulated by the Utility Regulator.
How often does the price cap change?
Every three months. The cap changes on 1 January, 1 April, 1 July, and 1 October each year. Ofgem announces each quarter's cap roughly six to eight weeks in advance — the Q4 2026 cap (October–December) was confirmed in August 2026, and the next announcement, covering January–March 2027, is expected in late November 2026.
Does the price cap cover gas and electricity?
Yes — the price cap covers both gas and electricity for households on standard variable tariffs. It sets separate unit rates and standing charges for each fuel. From 1 October 2026, the confirmed rates are gas at 7.97p/kWh and electricity at 26.32p/kWh, with standing charges of 29.04p/day for gas and 54.83p/day for electricity (all figures direct debit, averaged across England, Scotland and Wales). Electricity is temporarily VAT-free from October 2026 to March 2027, while gas continues to carry 5% VAT. Source: Ofgem, energy price cap will rise 4% October 2026. Source: Ofgem.
Is the price cap the same across the UK?
The figures Ofgem publishes are national averages. In practice, unit rates and standing charges vary by region because network distribution costs differ across the country. Northern regions and rural areas often pay slightly more. Northern Ireland is not covered by the Ofgem price cap at all — it has its own separate energy regulatory framework. Check your supplier's tariff for your region-specific rates.
What's the difference between the price cap and a fixed tariff?
The price cap applies to standard variable tariffs and changes every quarter. A fixed tariff is a contract with your supplier that locks your unit rate for a set period — usually 12 months — regardless of what the cap does. Fixed tariffs can be cheaper than the cap or more expensive, depending on when you fix and what happens to wholesale prices. Fixed deals usually come with early exit fees; cap tariffs do not.
Why is my standing charge higher than the price cap?
The price cap sets a maximum standing charge that suppliers can apply — but your bill may show a higher standing charge if your region has higher network costs, or if your meter type attracts different charges. Regional distribution costs vary across England, Scotland and Wales, which is why Ofgem publishes regional rate breakdowns alongside the national averages. If your standing charge seems unusually high, check Ofgem's regional rates table or contact your supplier.
