Energy price cap explained: what is the energy price cap?

🚩 The energy price cap does not limit your total bill. It sets the maximum unit rates and standing charges suppliers can charge on standard and default tariffs, so if you use more energy, you’ll pay more.

What's the latest energy price cap and what does it mean for me?

The energy price cap currently stands at £1,723 for a typical dual-fuel household paying by Direct Debit. This applies until 31 December 2026. The next price cap starts on 1 January 2027.

Ofgem changed the typical household energy usage figures it uses to illustrate the price cap from 1 July 2026, reflecting lower average household consumption. This means headline price cap figures from July 2026 onwards should not be directly compared with figures from earlier periods without taking this change into account.

On a like-for-like basis, the price cap has risen by 4%, from £1,663 for July to September to £1,723 for October to December 2026.

Changes in the market mean we’re now able to offer better energy deals through our switching service, including fixed-rate tariffs that could help protect you from future price rises.

Energy price cap unit rates

Figures are rounded to two decimal places and based on the England, Scotland, and Wales average for people who pay by Direct Debit. From 1 October 2026, electricity is zero-rated for VAT, while gas continues to include 5% VAT. Because of the VAT change, electricity costs are difficult to compare with previous price cap periods.

Ashton Berkhauer
Home & Utilities Expert

Our expert says

To help manage the fluctuating cost of energy, we recommend looking into fixed-rate tariffs. By locking in a fixed rate, you can shield yourself from future price hikes and have a clear idea of what your energy costs will be.

In these uncertain times, fixing your rate can offer peace of mind and make budgeting easier. We would advise anyone looking to lower their energy costs to secure one of our money-saving tariffs or another fixed option before they disappear.

Why was the cap introduced?

The price cap was intended as a safety net for customers who do not regularly switch and who are on standard or default tariffs – typically a supplier’s most costly tariff.

The aim of the cap was to make sure customers who didn’t switch still got a ‘fair price’.

Despite this, variable tariffs set at the price cap level were usually some of the most expensive deals.

What if my energy supplier goes bust?

If your provider does collapse, there’s no need to panic, as Ofgem steps in to protect customers.

The regulator carries out a process of choosing a new supplier to ‘rescue’ the business.

You can be reassured that your energy supply will continue as normal, and any credit balances will be protected.

What if I’m struggling to pay my bills?

Crucially, if you’re struggling to afford heating costs, you should contact your energy supplier as soon as possible.

Some providers also allow you to reduce your outgoings by taking advantage of the Demand Flexibility Service.

The scheme rewards eligible households for changing when they use electricity at certain times to help balance the electricity system. It now operates throughout the year, and you can check whether your supplier or another registered provider offers the service.

You may be eligible for extra help too. This will depend on your circumstances but could include:

• Debt repayment plans

• Payment breaks

• Emergency credit for those on prepayment meters

• Schemes such as the Winter Fuel Payment or the £150 Warm Home Discount

Read more here: Where to turn for help with your energy bills

Take steps to reduce your bills

Now is also a good time to take steps around your home to be more energy efficient ahead of increased energy usage during the winter months.

Simple things you can do include switching gadgets off standby, making the move to energy-saving light bulbs, and only boiling the amount of water you need in the kettle.

You may also want to compare energy deals to see whether switching or fixing your tariff could help reduce your costs or protect you from future price rises.

Need some more pointers? Read our simple tips for being more energy efficient.

Is there an energy price cap for business energy?

No, the energy price cap only affects domestic energy tariffs.

Instead, the government introduced the Energy Bills Discount Scheme, or 'EBDS'. This offered discounted energy rates on eligible non-domestic energy contracts for 12 months from 1 April 2023 to 31 March 2024.

The scheme has now closed, so comparing business energy deals remains one way businesses can look for a more competitive tariff.