What is the energy price cap?

The energy price cap is a limit set by Ofgem on how much energy suppliers can charge per unit of gas and electricity. It protects consumers on default (standard variable) tariffs from excessive prices. It does not cap your total bill — if you use more energy, you pay more. It is reviewed every quarter.

Does the energy price cap limit my total bill?

No. The price cap limits the maximum rate per unit of energy and the daily standing charge. Your total bill depends on how much energy you use. The 'typical household' figure quoted (e.g., £1,738/year) is based on average usage and is not a guarantee of what you will pay.

Can I pay less than the price cap?

Yes. Fixed-rate tariffs can sometimes be cheaper than the price cap. It is worth comparing deals, especially when the price cap is higher than available fixed tariffs. Use comparison sites to check whether you could save by switching.

Energy Price Cap Explained UK — What It Means for Your Bills | PocketWise

The energy price cap is designed to protect UK households from excessive energy prices. Understanding how it works helps you make better decisions about your energy tariff and when to switch.

What the Price Cap Is

Feature	Detail
What it caps	Maximum rate per kWh + daily standing charge
Who sets it	Ofgem (energy regulator)
How often it changes	Every 3 months (Jan, Apr, Jul, Oct)
Who it applies to	Households on default/standard variable tariffs
Who it does NOT apply to	Fixed-rate tariff customers, businesses

How It Affects Bills

Typical Household*	At Price Cap Level
Electricity	~2,700 kWh/year
Gas	~11,500 kWh/year
Total annual cost	~£1,738**

*Ofgem’s “typical” household figures. **Example figure — actual cap varies by quarter.

Key Point: Usage Matters

Your Usage	Impact
Less than typical	Pay less than quoted figure
More than typical	Pay more than quoted figure
Large home / multiple occupants	Likely pay more
Small flat / efficient home	Likely pay less

Current Price Cap Components

Component	Approximate Rate*
Electricity unit rate	~24–28p/kWh
Gas unit rate	~6–7p/kWh
Electricity standing charge	~53–60p/day
Gas standing charge	~31–32p/day

*Rates change quarterly — check Ofgem for current figures.

What Are Standing Charges?

Detail	Info
What they are	Daily fee to be connected to the grid
Whether you use energy	You pay these even if you use zero energy
Why they exist	Cover network maintenance, metering, policy costs
Can you avoid them?	Not currently — all tariffs include them

Price Cap Schedule

Date	What Happens
January	New cap level takes effect
Late February	Ofgem announces April cap
April	New cap level takes effect
Late May	Ofgem announces July cap
July	New cap level takes effect
Late August	Ofgem announces October cap
October	New cap level takes effect
Late November	Ofgem announces January cap

How to Respond to Price Cap Changes

When the Cap Goes Up

Action	Why
Check fixed tariffs	May be cheaper to lock in
Reduce energy usage	Lower consumption = lower bills
Check eligibility for support	Warm Home Discount, grants
Spread costs	Set up Direct Debit, pay monthly

When the Cap Goes Down

Action	Why
Review current tariff	SVT will track the cap down
Compare fixed deals	May find long-term savings
Overpayment in account?	Request a refund if in credit

Fixed Tariff vs Price Cap

Fixed Tariff	Standard Variable (Price Cap)
Rate locked for 12–24 months	Changes every quarter with cap
Could be cheaper or more expensive	Follows the cap
No exit fees (since 2020)	No fees (default tariff)
Certainty	Flexibility

When to Fix

Scenario	Recommendation
Fixed rate below current cap	Consider fixing
Fixed rate above current cap	Stay on SVT unless cap expected to rise
Cap predicted to rise	Consider fixing to lock in lower rate
Cap predicted to fall	Stay variable or wait
Prefer predictability	Fix for peace of mind

Prepayment Meters

Feature	Detail
Different cap level	Prepayment has its own cap (was historically higher, now similar)
How you top up	Cards, apps, PayPoint
Self-disconnection risk	If you cannot afford to top up
Support available	Contact supplier if struggling

Support for Energy Bills

Support	Who Qualifies
Warm Home Discount	Pension Credit recipients, low income
Winter Fuel Payment	Pension age
Cold Weather Payment	Certain benefits, when temp drops
Energy Company Trust Funds	Application to individual suppliers
Household Support Fund	Via local council

See our energy grants and schemes guide for full details.

Reducing Your Bills

Action	Potential Saving
Reduce heating by 1°C	~£100/year
LED bulbs	£40+/year
Shorter showers	£50+/year
Draught proofing	£125/year
Smart thermostat	Variable
Efficient appliances	Variable

See our reduce energy bills guide for more tips.

Understanding Your Bill

Bill Component	What It Is
Unit rate (kWh)	Cost per unit of energy used
Standing charge	Daily connection fee
VAT (5%)	Applied to total energy costs
Total	Units used × rate + (standing charge × days) + VAT

For more on managing energy costs, see our switching energy supplier guide and household bills guide.