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 £1,641 for a typical dual-fuel household paying by Direct Debit. This applies until 30 June 2026.

From 1 July to 30 September 2026, the energy price cap will be £1,862 for a typical dual-fuel household paying by Direct Debit.

But Ofgem has also changed how it calculates the “typical annual bill” figure used in price cap announcements. This means the latest headline figure is not directly comparable with previous quarters.

While the typical annual bill figure has changed, the unit rates for gas and electricity are increasing from 1 July. If you use the same amount of energy as before, you could still end up paying more.

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. These include 5% VAT.

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.

This offers cheaper energy if you reduce your usage at designated times of day, during certain months. You can check if your supplier is signed up to the Demand Flexibility Service, or is planning to participate in future, by giving them a ring.

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.

No new schemes have been announced, so comparing and switching your business energy supplier remains the primary way you can take steps to reduce your energy bills.