Energy price cap: what it means for your energy bill

Last checked: 01 October 2026

If you have seen headlines about the energy price cap changing and want to know what it actually means for your bill, this page explains it in plain terms. It covers the current cap period, what the cap does and does not control, who it applies to, and what to check on your own bill, since the headline figure quoted in the news is rarely the exact amount any individual household pays.

Latest energy price cap update

• Current period: 1 October 2026 to 31 December 2026 
• Announced by Ofgem: 26 August 2026 
• Change from the previous period: up 4% for a typical household paying by Direct Debit

According to Ofgem's own announcement, a typical household using both gas and electricity and paying by Direct Debit will see the cap rise by around £60 a year (roughly £5 a month) compared to the previous period, based on Ofgem's current typical consumption assumptions. This means the price cap would be £1,723 for the average household using both gas and electricity. 

Current rates for a typical Direct Debit customer:

These are averages across England, Scotland and Wales. Your actual rate can vary by region, payment method and meter type. See Ofgem's full announcement for the complete rate tables.

Important VAT change this period: the government removed VAT from electricity bills from 1 October 2026 to 31 March 2027. Ofgem's own figures for this period reflect that change, which means costs cannot be directly compared to the previous quarter on a like-for-like basis. Gas still carries 5% VAT.

Ofgem's next cap announcement is expected by 25 November 2026, covering 1 January to 31 March 2027.

What is the energy price cap?

The energy price cap is set by Ofgem, the UK's energy regulator, and reviewed every three months. It applies to default tariffs, meaning standard variable tariffs that customers are placed on when they are not on a fixed deal.

Ofgem introduced the cap on 1 January 2019 to protect customers on expensive default tariffs, particularly those who may not have actively switched or negotiated a better deal. According to Ofgem, the cap currently protects around 22 million households across Great Britain. If you are on a default tariff, the cap provides some protection against being charged excessively high rates, although it does not necessarily mean you are getting the cheapest tariff available.

The cap limits the maximum unit rate and standing charge a supplier can charge on a default tariff. It is important to remember that it does not cap the total amount you can be billed. Your bill will still depend on how much energy you use, so using more energy can mean paying more even when the price cap remains unchanged.

Ofgem rebuilds the cap from scratch each quarter, based on the actual costs suppliers face. These include wholesale energy costs, network costs, policy costs that fund schemes such as the Warm Home Discount, suppliers' own operating costs and a small regulated profit margin. Wholesale costs are the main reason the cap moves from one quarter to the next, as they can be affected by global events such as conflicts, weather and changes in demand. This is why it is worth looking at both the current price cap and your own energy usage when trying to understand or reduce your bill.

What changed in the latest cap period?

For the previous period, from 1 July to 30 September 2026, the typical household figure for a Direct Debit customer was £1,663 a year. For the current period, from 1 October to 31 December 2026, Ofgem confirms this has risen to £1,723 a year. This is a 4% increase, equivalent to around £60 a year, or roughly £5 a month.

The increase was driven mainly by higher wholesale gas prices, which Ofgem and other market commentators have linked to ongoing conflict in the Middle East and its impact on global energy markets. If you have noticed your energy costs increasing, this is one of the main factors behind the latest change to the cap.

There is also an additional factor to consider when comparing these two periods. The government has removed VAT from electricity bills for the period from 1 October 2026 to 31 March 2027. This means that part of the change in what households pay reflects this policy change, rather than changes in wholesale energy costs. Gas continues to carry 5% VAT.

It is worth keeping in mind that the £1,723 figure is based on a typical household, so it should not be treated as a prediction of what your own bill will be. Your costs may have changed by a different amount, or even in a different direction, depending on your actual energy use, where you live, how you pay and the proportion of your energy use that comes from electricity and gas. The VAT change applies to electricity only, so its effect will also vary between households.

Source: Ofgem price cap announcements, Winter 2020/21 to October–December 2026.

Who does the price cap apply to?

According to Ofgem, you are covered by the price cap if you are on a default (standard variable) tariff and pay by:

• Standard credit (paying when you receive a bill)
• Direct debit
• A prepayment meter
• An economy 7 meter

If you are on a fixed-rate tariff, the price cap does not apply to you, so you will not be affected by the change to the cap this quarter. Around a third of UK households are currently on fixed deals, according to Ofgem's most recent figures for this period.

If you are unsure which type of tariff you have, checking your latest bill or online account is a good place to start. Look for the name of your tariff and whether it is described as fixed or variable. A genuinely fixed deal will usually be clearly identified, for example as a "Fixed 12 Month" tariff, rather than simply being described as your current plan.

If you have never actively chosen or switched to a specific tariff, you are likely to be on a default tariff and therefore covered by the price cap. However, it is worth checking rather than assuming, particularly if you have recently moved home, changed supplier or reached the end of a fixed deal. If you are thinking about switching, our Energy Switch Guarantee guide covers what protections apply during the process.

What the price cap does not cap

This is one of the most common misunderstandings about the energy price cap, so it is worth clarifying what the cap actually means:

• The cap does not set one maximum total bill for every household.
• If you use more energy, you will pay more overall, even though the rates you are charged are capped.
• The typical-household figure published by Ofgem is based on average energy consumption. It is an illustration, not a prediction of what your own bill should be.

For example, imagine two neighbouring households on exactly the same capped rates. One is a single person who works from an office most days, while the other is a family of four who work from home and have the heating on for much of the day. They will pay the same rates for each unit of energy they use, but the family's total bill could be considerably higher because they use more energy.

So if your bill is higher than the headline figure you have seen quoted, this does not necessarily mean you have been charged incorrectly or that the price cap has not been applied. The amount of energy you use is one of the biggest factors determining what you actually pay.

Unit rates and standing charges explained

Unit rates

A unit rate is the price you pay for each kilowatt hour (kWh) of gas or electricity you use. The more energy you use, the more you will pay in unit-rate charges, so looking at your unit rate alone will not tell you what your total bill will be.

You can find your unit rates on a recent bill or in your online account, usually shown separately for electricity and gas. If you are on a default tariff, checking these against the current capped rates can help you understand whether you are being charged correctly. If your rates appear to be higher than the applicable cap, it is worth contacting your supplier to ask them to check your tariff.

Standing charges

A standing charge is a fixed amount you pay each day for your energy supply, regardless of how much energy you use. This means you will still pay a standing charge even if you use very little energy or are away from home.

If your energy usage is relatively low but your bill still seems higher than expected, it is worth checking your standing charge as well as your unit rates. For households that use less energy, the standing charge can make up a larger proportion of the overall bill.

Standing charges have also become an important part of discussions about energy bills. As well as covering the costs of maintaining the energy network, they include certain industry costs, including costs associated with suppliers that collapsed during the 2021–2023 energy crisis. This has contributed to standing charges remaining a significant part of household energy bills, even as wholesale energy prices have fallen from their 2022 peak. See our guide to standing charges for a fuller breakdown of what these cover.

Why figures may differ by region or payment method

The rates you see quoted by Ofgem are based on averages across England, Scotland and Wales, so the rate that applies to your home may be different. Your capped rates can vary depending on where you live and how you pay for your energy.

For example, rates can differ between customers paying by Direct Debit, standard credit or prepayment meter. Direct Debit rates are typically lower than standard credit rates, partly because they are less costly and more predictable for suppliers to administer.

If you want to check exactly what you should be paying, Ofgem publishes regional rates for each price-cap period. Your supplier should also show the specific unit rates and standing charges that apply to your tariff on your bill or online account.

What does the cap mean for a typical household?

Ofgem's typical-household figure is based on its Typical Domestic Consumption Values (TDCV), a standardised estimate of how much gas and electricity an average household uses. This gives consumers a consistent figure to use when comparing different price-cap periods and tariffs. It is not a prediction of what your own household will pay, and your actual usage may be quite different from the typical amount.

Your actual bill depends on:

• How much energy you use
• Which region you live in
• Your payment method
• Your meter type

Your household circumstances can also give you a rough indication of whether your usage is likely to be below or above the typical figure. For example, living alone or as a couple, living in a flat or smaller property, or spending much of the day away from home may mean you use less energy. A larger household, bigger property, regular working from home or electric heating may mean you use more.

These are only general indicators, rather than a way of predicting your bill. The most useful way to understand your own costs is to look at your actual energy consumption alongside the rates and standing charges on your tariff. This can help explain why your bill may be significantly higher or lower than Ofgem's headline typical-household figure without there necessarily being anything wrong.

What should you do next?

• Check your tariff name and contract status. Log into your online account or check a recent bill to confirm whether you are on a default (variable) tariff affected by this change, or a fixed deal that runs to its own separate terms.
• Compare your unit rates and standing charges against the current capped rates shown above, since suppliers should not charge more than these on a default tariff.
• Review your recent usage and meter readings, since this is what actually drives your bill, not the headline cap figure. A bill that looks high is not automatically wrong, and a bill that is technically correct is not automatically affordable; these are different problems with different solutions.
• Check available support if your bill feels unaffordable, such as the Warm Home Discount, or see our guide on what to do if your energy bill is too high for a fuller checklist.
• Review your current tariff if it no longer suits your household, particularly if a fixed deal is ending soon and you are about to roll onto a default tariff without actively choosing to.

Can you get a deal below the price cap?

The price cap gives you a useful benchmark for understanding the rates you may pay on a standard variable tariff, but it does not mean that every household will have the same bill or that a capped tariff will always be the right option for you. Your best choice depends on your current tariff, how much energy you use and the options available at your property. See our guides to fixed energy tariffs and standard variable tariffs if you want to understand either option in more detail.

Now that you understand how the current cap applies, you can review the energy tariffs currently available through Switchcraft.

Review available energy tariffs

Frequently asked questions