The UK energy price cap is the single most misquoted number in British consumer journalism. Each quarter, headlines announce that the cap has gone up or down “to £x” — and each quarter, readers ask why their bill bears no resemblance to the figure in the headline. The confusion is understandable: the cap does not cap what you pay. It caps the prices behind what you pay.
What the cap actually limits
Ofgem sets a maximum unit rate (in pence per kWh) and a maximum daily standing charge (in pence per day) that a supplier can charge on a default tariff — meaning the standard variable tariff that most households are on if they have not chosen a fix. The caps are set separately for electricity and for gas, and they vary a little by region, because the fixed costs of the network differ across the country.
What the cap does not do is cap the total pounds on your annual bill. The headline figure reported in the news (“the cap is now £1,X00”) is a figure for a specific illustrative household: a dual-fuel home that uses a certain amount of gas and a certain amount of electricity per year. If your home uses more, you pay more; if less, less.
The cap is a cap on prices, not on bills. Two households on the same tariff can pay very different totals and both be inside the cap.
Who the cap applies to
The cap covers default and standard variable tariffs for domestic customers paying by direct debit, standard credit (paying each bill) and, since 2024, by prepayment on the same basis as direct debit. It does not cover fixed-price tariffs: those are contracts whose unit rates and standing charges are agreed for the length of the fix. If you are on a fix, the cap is not your protection — your contract is.
Business customers are not covered. Northern Ireland has its own energy regulator and sets its own rules.
How Ofgem works out the figures
Ofgem publishes the calculation openly. The price cap page explains the headings: wholesale costs (the biggest), network costs, policy costs (green levies, social schemes), operating costs, EBIT (a small profit allowance), and various adjustments. VAT at 5% sits on top; Ofgem noted VAT on gas at 5% for the 1 October 2026 to 31 March 2027 period.
The cap is updated quarterly: January to March, April to June, July to September, October to December. A review a few weeks before each window announces the new numbers. The actual pence figures change often enough that quoting them in an article from a few months ago is a mistake. Always check the current figure on the Ofgem page for your region.
Why bills can rise when the cap falls
Three reasons, in order of how often they come up:
- Standing charge vs unit rate. The cap sets both. In recent reviews the unit rate has moved more than the standing charge. A household that uses little energy pays most of its bill as the standing charge; a cap cut on the unit rate changes little for them.
- Usage. Winter uses more energy than summer. A bill reflecting November feels much bigger than one for August even when the cap has fallen in between.
- Direct debit smoothing. If your fixed monthly payment is set against last year’s usage, and last year was colder, this year’s payment lags reality by months.
What the cap does not do
- It does not stop prices going up when wholesale markets rise. The calculation lets them pass through, with a lag.
- It does not cap fixed tariffs. If you sign a fix, the contract rate is what you pay for the term.
- It does not guarantee the “cheapest” tariff on the market is a capped one. During quiet periods, fixes can be cheaper. During shocks, they can be much higher.
The cap and your choices
If you are on a default tariff, you are already on the capped rate. There is no action to take to “get on the cap”. Your choice is whether to fix: a fix can be a good idea if you expect prices to rise and a bad idea if you expect them to fall, and nobody with a strong record predicts either reliably. The regulator’s own advice is to compare your current unit rate against any fix offered, and to check the exit fees for the fix before signing. The Citizens Advice energy hub has impartial guidance on switching.
If you are struggling with the bills under the cap, the cap will not help; the GOV.UK support pages list the Warm Home Discount, Cold Weather Payments and other schemes, and your supplier is required to offer a payment plan.
A note on standing charges
Standing charges have risen more quickly than unit rates in recent reviews, for reasons we cover in our piece on the standing charge. Because the cap sets a maximum for them, a review that lowers unit rates and raises standing charges can leave low-use households worse off even when the headline cap has fallen. If you use little energy — a one-bedroom flat with gas heating turned low, for example — look at the pence-per-day figure, not the pounds-per-year headline.
Where to check
Ofgem’s own price cap page is the authoritative source for the current figures, including the region-by-region breakdown. News headlines come and go; the Ofgem page is updated every quarter and shows the calendar of upcoming reviews.