Last updated: April 2026 · Sourced from official UK government publications
📚 This is a plain-English definitions guide. All figures and rules are drawn from Ofgem official sources. This is not financial advice, see the disclaimer below.
The energy price cap is one of the most talked-about things in UK household finance, and also one of the most misunderstood. The biggest misconception: it doesn’t cap your total bill. Here’s what it actually does, in plain English.
The energy price cap sets a maximum unit rate that suppliers can charge for gas and electricity, and a maximum standing charge. It does not cap your total bill, that still depends on how much energy you use. A household using more than the Ofgem typical average will pay more than the headline annual figure, even under the cap.
Think of it like a maximum price per litre of petrol. The cap controls the price per unit, not how many units you use. A larger home or a family that uses more heating will always pay more than a smaller household, even if the cap is the same.
Ofgem (the Office of Gas and Electricity Markets) is the UK’s energy regulator. It sets the price cap and reviews it every three months based on wholesale energy prices on global markets. When gas prices spike, as happened after Russia’s invasion of Ukraine, the cap rises. When wholesale prices fall, the cap follows.
The cap sets maximum permitted levels for the electricity unit rate (pence per kWh), the gas unit rate (pence per kWh), and the daily standing charges for both fuels. It applies to customers on standard variable tariffs, the default for most households who have never switched. Customers on fixed-price deals are unaffected until their deal ends.
Ofgem sets maximums for:
The cap applies to customers on standard variable tariffs, the default tariff most people are on if they’ve never switched. If you’re on a fixed-price deal, the cap doesn’t affect you until that deal ends.
Your annual bill is roughly:
(electricity unit rate × electricity units used) + (electricity standing charge × 365) + (gas unit rate × gas units used) + (gas standing charge × 365)
Ofgem publishes a ‘typical household’ figure based on average usage, that’s the headline number you see reported in the news. But your actual bill will be higher or lower depending on your home and usage.
Ofgem reviews and updates the price cap every three months, with new levels taking effect on 1 January, 1 April, 1 July, and 1 October each year. Each change reflects wholesale energy costs over the preceding period, and Ofgem announces the new level roughly six weeks in advance.
Ofgem reviews and resets the price cap every three months:
Each change is announced roughly six weeks in advance. FinanceSimply covers every announcement the morning it’s confirmed.
No. The price cap applies only to customers on standard variable tariffs. Customers on a fixed-rate deal have their unit rate locked for the duration of that deal, regardless of how the cap moves. Whether a fixed tariff is cheaper or more expensive than the cap depends on the rates agreed at the time and how wholesale prices change during the fixed period.
The price cap only applies to customers on standard variable tariffs. Energy suppliers also offer fixed-rate tariffs where the unit rate is locked for a set period, regardless of Ofgem cap changes. Whether a fixed tariff costs more or less than the cap depends on the rates available at the time and how the cap moves during the fixed period.
Ofgem publishes guidance on energy tariff types at ofgem.gov.uk. The government’s energy-saving advice, including information on insulation schemes and efficiency measures, is published at gov.uk/improve-energy-efficiency.
The Ofgem energy price cap limits the unit rates and standing charges that suppliers can charge customers on default tariffs. It does not set a maximum total bill. Because households use different amounts of energy, actual bills vary. Someone who uses more energy than the Ofgem typical household assumption will pay more than the headline annual figure Ofgem publishes.
Ofgem reviews and updates the energy price cap every three months, with new levels taking effect in January, April, July, and October each year. Each adjustment reflects changes in wholesale energy costs over the preceding period. Ofgem announces the new cap level several weeks in advance, giving households time to anticipate any change to their bills.
No. The headline figure Ofgem publishes, for example, £1,849 per year, is based on a typical household using around 11,500 kWh of gas and 2,700 kWh of electricity annually. Households that use more energy than those assumed amounts will pay more. The cap limits the rate charged per unit, not the total amount a household can be billed over a year.
The price cap applies to all Ofgem-licensed gas and electricity suppliers in Great Britain for customers on standard variable tariffs and prepayment meters. Customers on fixed-rate tariffs that were agreed before a cap change are generally protected by the terms of their fixed deal, which may be above or below the prevailing cap rate.
The unit rate is the amount charged per kilowatt-hour (kWh) of energy consumed. The standing charge is a fixed daily fee applied regardless of how much energy is used, covering network maintenance and supply costs. The energy price cap sets maximum permitted levels for both of these components, and the specific rates can vary by region across Great Britain.
Ofgem announces cap changes every quarter. FinanceSimply covers each one the morning it happens, what it means for your bills, in plain English.
Subscribe free →