Energy Bills and the Price Cap

Energy Bills and the Price Cap: The Full UK Guide

Every UK household energy bill is built from two prices: a charge for each unit of energy you use, and a daily standing charge you pay whether or not you use anything. For most homes, both of those prices are limited by the energy price cap, which the regulator Ofgem sets every three months for customers in each energy supply region of Great Britain¹. The cap came into force at the beginning of 2019 and now protects around 22 million default and standard variable tariff customers³.

What the cap does not do is limit your total bill. The more energy you use, the higher your bill will be, and the headline figure you see in the news is a typical bill for a household using assumed amounts of gas and electricity, not a ceiling on what you can be charged¹. For the period from 1 October to 31 December 2025, that typical annual dual-fuel bill was £1,755 for a Direct Debit customer, £1,890 for a standard credit customer and £1,707 for a prepayment customer⁵. From 1 April to 30 June 2026 the cap was set at £1,641, a fall of 7%⁶.

What the price cap actually limits

The price cap protects people on tariffs where the unit rate can go up or down depending on the energy market. It sets the maximum amount a supplier can charge for a unit of energy and the daily standing charge together, with separate caps for gas and electricity¹. It was introduced because of concerns that customers who never switched supplier were paying more than they needed to, and it remains, in Ofgem's own framing, a backstop rather than a guarantee of the cheapest possible bill³.

The cap came into force at the beginning of 2019 and was introduced across all payment types in January 2019². Its history has been dramatic. Rapid increases in wholesale energy prices from mid-2021 onwards led to a 54% increase in the cap in April 2022, and the October to December 2022 cap reached £3,371⁷. During the crisis period the government's Energy Price Guarantee stepped in to hold typical bills below the cap level, with average standing charges for customers on default tariffs capped in line with the levels set by Ofgem until the end of June 2023⁸. Compared to the start of 2023, the level in late 2025 was £625, or 26.3%, lower than when the energy crisis was at its peak⁹.

For a household thinking about energy independence, the cap matters in one specific way: it sets the price you are trying to reduce when you cut consumption or generate your own power. Every kWh you avoid buying is charged at the capped unit rate, and every day you are connected you pay the standing charge regardless. The cap is a limit on the price of dependence, not a route out of it.

Standard variable tariffs only: who the cap protects

The cap applies to default tariffs, the ones suppliers put you on when you have not agreed a fixed deal. These are called standard variable tariffs, and people on this type of tariff are protected by the energy price cap¹. The cap applies where a customer has not signed up for a fixed-term contract with their supplier, and it does not matter how you pay your bills, whether by Direct Debit, standard credit or prepayment meter².

What is not covered is just as important:

• Fixed tariffs, where you have agreed a rate for a set period¹
• Business energy contracts¹
• Heat networks, which are classed as commercial supplies and are not covered by the Ofgem cap¹²
• Heating oil, which is bought as a fuel rather than supplied through a metered tariff¹

The distinction matters because a fixed tariff can sit either below or above the cap level, depending on when it was signed and what happened to wholesale prices afterwards. A household on a default tariff is protected by the cap automatically, with nothing to apply for and nothing to activate. If you are unsure which type of tariff you are on, the name is printed on your bill: if it includes the words standard variable or default, the cap applies to you. Our page on fixed and standard variable tariffs explains the differences in full.

Unit rates and standing charges: the two numbers that set your bill

Every bill is calculated from the same building blocks: VAT at 5%, wholesale costs, network costs, operating, debt and industry costs, policy costs, and adjustments for the type of energy you use, the type of meter installed and how you pay your bill¹⁰. The cap's job is to set a maximum for the two prices a household actually sees: the unit rate, charged per kWh of gas or electricity, and the daily standing charge¹.

The unit rate is what makes consumption expensive or cheap. For 1 January to 31 March 2026, the electricity unit rate under the cap was 27.69p per kWh, with a daily standing charge of 54.75p, as averages across Great Britain¹¹. The standing charge is a fee you pay each day, even if you do not use any energy on that day¹⁴. Multiply your annual kWh by the unit rate, add the standing charge multiplied by 365, and you have the shape of your bill, before any credit or debt adjustments.

The exact rates depend on where you live, your payment method, your fuel and your meter type¹. A household on an Economy 7 meter, for example, has two electricity unit rates rather than one, and the cap sets separate maxima for each. Our pages on electricity and gas unit rates by region and price cap rates by payment method give the detail.

Typical bills: £1,755 by Direct Debit, £1,890 by standard credit, £1,707 on prepayment

The figures quoted in the news are typical annual dual-fuel bills for a household with assumed consumption, broken down by payment method. For 1 October to 31 December 2025:

The rise that quarter came from increases in the costs of transporting energy in Great Britain and in costs towards government schemes and essential support, and for a typical household it meant bills increasing by £2.93 a month, or £35.14 per year⁹. Ofgem framed it as a typical household paying £102 from October to December instead of £100 per month, based on the inflation rate⁹.

These typical figures move around noticeably over time. In the first quarter of 2025 the Direct Debit level was £1,738, having risen 6.4% from £1,649 the previous quarter¹⁶. It then fell to £1,720 by July to September 2025¹⁷, before the £1,755 figure for the final quarter of the year⁵. For 1 January to 31 March 2026, the typical annual bill for a dual-fuel home with typical usage paying by Direct Debit was around £1,758¹¹. The cap level for 1 April to 30 June 2026 was set at £1,641, a fall of 7%⁶.

The gap between payment methods is structural, not accidental. Standard credit customers pay more because suppliers face higher costs and risk from cash and cheque payment; in 2024 the standard credit cap was £106 higher than the Direct Debit equivalent¹⁸. Prepayment customers pay less than they otherwise would because of the levelisation allowance, which makes sure prepayment and Direct Debit customers pay the same standing charge¹. Our page on what the typical household figure actually means unpacks the assumptions behind these numbers.

The fixed daily amount charged regardless of usage

The standing charge is a daily charge that energy customers have to pay even if they use no energy¹⁹. It is used to recover the costs required to provide energy company services: providing and maintaining the wires, pipes and cables that deliver power to your door, through to the staff and buildings required for the energy business to function¹⁹. The Energy Ombudsman describes it as a daily charge you cannot opt out of or reduce, payable even if you use no gas or electricity²⁰.

For 1 January to 31 March 2026, the electricity standing charge under the cap was 54.75 pence per day, based on the average across England, Scotland and Wales and including VAT at 5%¹³. In the previous quarter the gas standing charge on a standard variable tariff paid by Direct Debit was 34.03 pence per day⁹. Over a year, a dual-fuel household's standing charges alone run to a few hundred pounds before a single unit of energy is bought.

Standing charges have been controversial, and Ofgem has looked at moving costs from them into unit rates. Its decision was not to move a further £20 to £100 of costs from standing charges to unit rates²¹. When the cap rose in April 2025, some households saw a small increase in standing charges of up to £20 per year for a typical dual fuel consumer²².

For a household pursuing energy independence, the standing charge is the hard floor of the bill. Solar panels, battery storage and careful consumption can push the unit-rate part of a bill towards zero, but the daily charge is paid for as long as the home remains connected. Our pages on standing charges, standing charge reform and zero standing charge tariffs and no standing charge tariffs cover the options and their trade-offs.

How the cap is built: wholesale, network, policy and operating costs

Ofgem builds the cap from the real costs of supplying energy. The components are wholesale costs from buying energy on the open market, network costs, policy costs, operating costs, the supplier's earnings before interest and tax (EBIT), headroom, the levelisation allowance and VAT at 5%¹. The wholesale index is calculated on a 12 month forward view of gas and electricity prices, a methodology adopted when Ofgem moved from setting the cap every six months to every quarter in summer 2022, in response to high and volatile wholesale prices²³.

Wholesale costs are the largest component and the reason the cap moves. Ofgem's review of wholesale cost allowances examined how closely the allowances tracked actual costs: for electricity, the difference between allowances and costs at benchmark consumption ranged from a weighted average of £19 per standard variable tariff customer to an upper quartile figure of £69, with a maximum of £165, across the periods examined²⁴. For gas, the maximum difference was £316 per customer²⁴. These gaps are one reason a supplier can make or lose money on capped tariffs depending on how it buys energy.

Network costs, the charges for carrying electricity and gas across the country, are the next most important component, making up around one quarter of the total². Policy costs, the levies that fund government schemes, are the component a government can most directly change, and they are covered in a later section of this page. Operating costs cover the day-to-day running of a supply business, including allowances for debt and bad debt from customers who cannot pay²¹.

The practical meaning for a household is that most of the bill is beyond a supplier's control and beyond a customer's control. Only the consumption part responds to behaviour. Our page on what makes up an energy bill and our page on policy costs and levies go deeper into each component.

Fourteen regional caps across Great Britain

There is no single cap. A separate price cap is set for each of the 14 regions and applies throughout the region, with no breakdown below regional level². The differences come mostly from network costs: the price of moving electricity across the Highlands is not the price of moving it across London, and the cap passes that difference through.

The regional spread is visible in the published levels. For 1 October to 31 December 2025, the annual electricity cap for a single-rate meter at 3,100 kWh paid by other payment methods ranged from £916.85 in London to £960.22 in the South East, with the Eastern region at £950.99 and the Southern region at £936.78²⁵. Even at nil consumption the differences persist: the annual charge for using no electricity at all ranged from £155.12 in the Southern region to £165.45 in the South East and £167.73 in the Eastern region, reflecting standing charge differences alone²⁵. On prepayment, the North Wales and Mersey region had a nil-consumption level of £243.15, against £208.10 in the Northern region²⁵.

For 1 July to 30 September 2026, the benchmark maximum charges show the same pattern: a Yorkshire household on a single-rate meter faced a standing charge of £223.79 and an annual bill of £826.29 at 2,500 kWh, while an East Midlands household faced £186.33 and £783.86, and a North West household £165.50 and £787.60²⁶.

The headline figures you read in the news are averages across all regions in Great Britain²⁷, which is why your own bill's rates will not match them exactly. Our page on electricity and gas unit rates by region lists the rates for every region and quarter.

The quarterly review cycle

Ofgem sets the price cap level every 3 months¹. The regulator revises the cap each quarter, and each announcement covers the three-month period that follows: the level announced in late February applies from 1 April, the level announced in late May applies from 1 July, and so on². The announcement sets out the maximum unit rates and standing charges for each region and payment method, together with the typical bill figure⁵.

The quarterly cycle dates from summer 2022, when Ofgem moved from setting the cap every six months in response to high and volatile wholesale prices²³. The forward-looking methodology means the cap reflects a 12 month view of the market rather than the spot price on any given day, which smooths movements in both directions²³.

Tracking the next change is straightforward. Ofgem publishes the new levels on its website at each review, and the announcement is normally covered in the news with the typical bill figure. The current cap period always has a defined end date, and the next period's levels are published before the current ones expire. Our page on price cap history and announcement dates lists every level since 2019 and the dates of upcoming reviews.

Why your bill can still exceed the cap figure

The cap does not limit the cost of your total bill. The more energy you use, the higher your bill will be¹. This limit is not on the total bill, which varies depending on how many units of energy you use in a billing period²⁸. The typical figure is a benchmark, not a ceiling.

Three things push a bill above the headline number. First, consumption: the typical figure assumes 2,500 kWh of electricity and 9,500 kWh of gas a year⁷, and a larger home, a household working from home or a home with electric heating will use more. Second, payment method: a standard credit customer pays more than a Direct Debit customer for the same energy⁵. Third, region and meter type: your rates are set by where you live and how your meter records usage¹.

Estimated readings add a fourth cause. A bill based on an estimate rather than an actual reading can be well above or below your real usage, with the difference trued up when a reading is finally taken. Our pages on why your bill is higher than the cap figure, meter readings and estimated bills and reading an energy bill cover the practical steps.

Fixed tariffs versus the cap

The cap applies where a customer has not signed up for a fixed-term contract with their supplier². A fixed tariff is a contract at agreed rates for a set period, and those rates are not limited by the cap, though they are influenced by it, because suppliers price fixed deals against the capped rates customers would otherwise pay.

The two products suit different exposures. A standard variable tariff tracks the cap, so the price rises and falls every quarter with the market; a fixed tariff holds a rate for its term, whatever happens to wholesale prices. Neither is guaranteed to be cheaper: a fixed deal signed before a cap fall can lock in rates above the new cap level, while a household that stayed on the cap through 2022 saw the typical level reach £3,371 before government intervention⁷.

Historically, the cap has delivered real savings for default tariff customers. Ofgem estimated that households on default tariffs were saving £75 to £100 a year, or £1 billion in total, at the time of the cap's early operation²⁹. But the regulator has always been clear that the cap is a backstop and that switching remains the way to pay less²⁹. Our pages on fixed tariff vs staying on the price cap, what happens when a fixed deal ends and switching energy supplier cover the decision in practice.

Northern Ireland: a market the cap does not reach

The price cap only applies to England, Scotland and Wales³. Northern Ireland has a separate energy market, with its own suppliers, its own regulator and its own tariff arrangements, and Ofgem's cap has no legal force there. Households in Northern Ireland instead rely on the Utility Regulator's oversight of tariff changes, and on the consumer protection arrangements specific to that market.

The practical differences are significant. Bills look different, tariffs are set differently, and the support schemes that ran alongside the cap during the energy crisis, such as the Energy Bills Support Scheme, had their own Northern Ireland arrangements. Our page on energy bills in Northern Ireland explains the market, and our pages on Power NI tariffs and how Power NI bills differ from Great Britain suppliers cover the largest supplier in detail. Help with bills and debt in each nation is covered on our pages for England, Scotland, Wales and Northern Ireland.

How policy shifts could affect what you pay ahead

Policy costs are the part of the cap a government can change directly, and they have been moving. The government cut these costs in April 2026 by ending a levy-funded scheme for energy efficiency and shifting funding for the largest renewable generation support scheme to general taxation². That shift is one reason the cap for 1 April to 30 June 2026 was set at £1,641, a fall of 7%⁶.

The direction of policy matters for future bills because levies on energy bills are a choice about who pays. Moving renewable support from bills to taxation lowers the capped unit rate for every household, including those least able to pay, while ending an energy efficiency scheme removes a subsidy that would have reduced some households' consumption permanently. Estimates published alongside the April 2026 change suggested the cap was expected to stay roughly the same until the end of the year¹¹.

For households, the lesson is that the cap is not purely a market number. A substantial share of it is government policy, and policy can move it in either direction. Our page on policy costs and levies on energy bills sets out each levy and where it sits in the bill.

Energy providers and their price capped deals

Every supplier operating in Great Britain's domestic market must apply the cap to its default tariffs, and Ofgem monitors compliance closely, stating it will continue to take firm action against suppliers who fall short of their requirements⁵. The cap therefore sets a common ceiling, but not a common bill: suppliers differ in service quality, in the fixed deals they offer alongside their default tariff, and in their financial resilience.

Supplier finances matter to customers because a failed supplier's customers are moved to a new supplier, usually onto a default tariff at the capped rates. The sector has been through severe stress: rapid increases in wholesale prices from mid-2021 onwards led to a 54% increase in the cap in April 2022⁷, a period in which ScottishPower stated that "our retail business is losing money during what is an incredibly difficult time for many of our customers"³⁰. Bulb Energy's collapse during that period is covered on our Bulb Energy page.

We maintain detailed pages on the main suppliers, including EDF, Octopus Energy and OVO Energy, each covering their tariffs, unit rates and billing. For the wider picture of how bills connect to self-sufficiency, see energy bills and energy independence, and for practical steps, reducing your energy bill.