Energy price cap explained: what it limits and what it means for your bill

Ofgem caps two things for each fuel: the price per kilowatt hour (kWh) of energy you use, and the standing charge, a fixed daily amount you pay even if you use nothing. Suppliers can charge less, but not more, on their default tariffs.

The cap applies if you are on a standard variable tariff, including when a fixed deal ends and you are moved onto one. It does not apply to fixed tariffs, which have their own prices for the length of the deal. Northern Ireland has a separate energy market and is not covered.

These are Ofgem's average Direct Debit rates for 1 October to 31 December 2026. Your exact rates depend on your region, meter and payment method, and are shown on your bill.

The typical bill rose 4%, from £1,663 to £1,723 a year. Ofgem attributes the rise mainly to higher wholesale gas prices. The government has removed VAT from domestic electricity from 1 October 2026 to 31 March 2027, which kept electricity costs broadly stable; gas still carries 5% VAT. Ofgem says prepayment customers pay the lowest rates, while paying on receipt of a bill (standard credit) costs more.

The £1,723 figure uses Ofgem's typical domestic consumption values, which were lowered in 2026 to reflect households using less energy. The headline figure works out at roughly 2,500 kWh of electricity and 9,500 kWh of gas a year. A small flat with electric heating and a large, draughty house with gas central heating will pay very different amounts under the same cap.

Here is how the typical figure breaks down:

Together that comes to about £1,723.

You can work out your likely cost in a few minutes.

Ofgem resets the cap every three months, for January, April, July and October. Each new level is announced around five weeks before it starts, so the January to March 2027 cap is due to be announced by 25 November 2026. If you are on a variable tariff, your supplier must tell you about price changes, and your Direct Debit may be reviewed.

Forecasts for future caps from consultancies are often reported in the news, but they are estimates and frequently change. Plan around the confirmed rate and keep a buffer for winter.

Ofgem notes that some fixed tariffs are priced £100 or more below the October 2026 cap. A fix gives certainty for the length of the deal, but you could pay more than the cap if wholesale prices fall. Before fixing, check:

Because the cap is a price per unit, using less is still the most reliable way to lower your bill. Our guides on cutting heating bills in winter and switching energy supplier have practical steps.

If you are struggling, contact your supplier early: they should offer an affordable repayment plan. The Warm Home Discount gives a £150 discount off electricity bills to eligible households, and the scheme reopens in October 2026. See government help with energy bills for other support. A small monthly energy buffer, built with something like SYM, can stop a cold January becoming a debt.