Bills
TL;DR
The Ofgem energy price cap limits the unit rate and standing charge that suppliers can charge for gas and electricity on standard variable and default tariffs. It resets quarterly in January, April, July and October. The cap applies per unit of energy consumed, not to a total bill, so high users pay more than the illustrative annual figure. Always submit meter readings when the cap changes to avoid estimated billing errors.
The energy price cap was introduced by Ofgem in January 2019 under powers granted by the Domestic Gas and Electricity (Tariff Cap) Act 2018. It sets the maximum unit rate and standing charge that licensed energy suppliers can charge households in Great Britain on default tariffs - meaning standard variable rate contracts. It does not apply to fixed-term tariffs, which can be above or below the cap depending on market conditions.
The cap is reviewed and updated quarterly. Ofgem calculates it based on wholesale energy costs, network charges, operating costs, policy costs and a supplier headroom allowance. This guide explains the current and upcoming quarterly cap levels, how the cap is calculated, what it means for your actual bill, and the protections available to vulnerable and low-income households.
Key facts (2026)
- The price cap resets on 1 January, 1 April, 1 July and 1 October each year; Ofgem announces each quarterly cap approximately six weeks in advance.
- The illustrative annual figure quoted by Ofgem is based on a typical household using 2,700 kWh of electricity and 11,500 kWh of gas per year (Ofgem Typical Domestic Consumption Values, revised 2024).
- The cap applies to unit rates and standing charges, not to total bills; households using more energy than the typical consumption values will pay proportionally more.
- The Warm Home Discount provides eligible low-income households with a £150 rebate on electricity bills in winter 2025-26 (DESNZ, 2025).
- Prepayment meter customers were charged above the credit meter cap before October 2022; since November 2022 they pay the same unit rate as credit meter customers (Ofgem, 2022, still in force 2026).
How Ofgem calculates the quarterly price cap
The cap is built from several cost components. Wholesale energy costs - the price suppliers pay on energy markets for gas and electricity - are the largest and most volatile component, accounting for approximately 35 to 40 percent of a typical bill during normal market conditions. Network charges (transmission and distribution) account for approximately 25 percent. Operating costs, metering, smart meter rollout costs and bad debt provisions make up the remainder, with a headroom allowance for supplier profit margin. Ofgem publishes a detailed methodology document for each quarterly update, showing how each component has changed from the previous period.
Unit rates, standing charges and what the illustrative figure means
The price cap sets maximum unit rates (pence per kWh) and maximum daily standing charges (pence per day). These vary by region, as network charges differ across Great Britain's distribution network areas. Ofgem publishes a full table of regional cap rates with each quarterly announcement. The widely reported "annual bill" figure - for example, £1,738 per year - is an illustrative average based on Ofgem's typical consumption values (2,700 kWh electricity, 11,500 kWh gas). A household using twice the typical amount pays roughly twice as much. A household using half as much pays roughly half as much. Your actual bill depends on your real consumption, your regional rates, and your standing charges.
Fixed tariffs versus the price cap
Fixed-rate energy tariffs lock in a unit rate and standing charge for a defined contract period - typically 12 or 24 months. The cap does not apply to fixed tariffs. When wholesale prices are low relative to the cap, suppliers tend to offer fixed tariffs below the cap level, providing bill certainty and potential savings. When wholesale prices are high, fixed tariffs above the cap level may appear. Whether to fix depends on your risk tolerance and the relationship between the current cap level and available fixed rates. Ofgem publishes guidance on comparing tariffs, and Citizens Advice maintains a comparison of available energy deals.
Support schemes for vulnerable and low-income households
The Warm Home Discount provides eligible households with a £150 rebate applied directly to electricity bills by their supplier, normally in November or December. Eligibility for the core group (automatic rebate) is based on receipt of Pension Credit Guarantee Credit or Universal Credit with specific characteristics. Other households can apply to their supplier's broader group scheme, subject to local criteria. Cold Weather Payments of £25 per qualifying period are triggered when the average temperature in your area is forecast to be or is recorded as 0 degrees Celsius or below for seven consecutive days (DWP, 2025/26). Winter Fuel Payments are now restricted to State Pension-age recipients of means-tested benefits following the August 2024 policy change.
What to do when the cap changes
When the quarterly cap rate changes on 1 January, 1 April, 1 July or 1 October, your supplier should automatically apply the new rates to your account. Submit an accurate meter reading just before or on the change date to ensure your bill is split correctly between the old and new rate. If you pay by direct debit and your supplier adjusts your monthly payment, check that the new payment is consistent with your actual usage rather than an overly cautious estimate. Ofgem's rules require suppliers to carry out an annual review of direct debit amounts and to credit or debit any resulting balance.
Related guides
- Best energy suppliers UK 2026 hub
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- UK smart meters guide 2026
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Frequently asked questions
Does the price cap mean my bill cannot exceed a set amount?
No. The cap limits the unit rate and standing charge, not the total bill. If you use more energy than the typical consumption values, your bill will be higher than the illustrative annual figure Ofgem publishes. Reducing your bill requires reducing your energy usage, switching to a fixed tariff below the cap, or applying for available support schemes.
Does the price cap apply in Northern Ireland?
No. The Ofgem price cap applies to Great Britain only (England, Scotland and Wales). Energy regulation in Northern Ireland is the responsibility of the Utility Regulator, which operates separate price control mechanisms. Northern Ireland households should check the Utility Regulator's website for current tariff information.
Can my supplier charge above the price cap?
No. Ofgem prohibits licensed energy suppliers from charging more than the capped unit rate and standing charge on default tariffs. If you believe your supplier is overcharging, submit a formal complaint to the supplier first. If unresolved within eight weeks, escalate to the Energy Ombudsman, which is free to consumers.
What is the typical consumption figure used for the cap?
Ofgem uses 2,700 kWh per year for electricity and 11,500 kWh per year for gas as its typical domestic consumption values (revised in 2024 to reflect improved energy efficiency in the housing stock). These are averages; your consumption may be higher or lower depending on property size, occupancy and energy efficiency measures in place.
Will fixing my energy tariff save money versus the cap?
Whether a fixed tariff is cheaper than the rolling quarterly cap depends on future wholesale prices relative to the rate locked into the fixed deal. If wholesale prices fall, the cap may drop below your fixed rate and you would be paying more than the default tariff. If wholesale prices rise, fixing early provides protection against cap increases. There is no universally correct answer; the decision reflects your assessment of future energy market conditions and your preference for bill certainty over potential savings.
How we verified this guide
Cap structure and calculation methodology were verified against Ofgem's published quarterly methodology document. Typical consumption values were confirmed from Ofgem's 2024 revised figures. Warm Home Discount eligibility was checked against DESNZ's 2025/26 scheme guidance. Cold Weather Payment triggers were confirmed from DWP's published 2025/26 rules. This guide was compiled in May 2026.
Primary sources
- Ofgem - Energy price cap information
- gov.uk - Warm Home Discount scheme
- gov.uk - Cold Weather Payment
- Domestic Gas and Electricity (Tariff Cap) Act 2018
Last reviewed: May 2026.