The energy price cap is the maximum a supplier may charge a household on a standard variable tariff for each unit of gas and electricity, plus a daily standing charge.
Ofgem, the energy regulator for Great Britain, sets it. Suppliers can price below the cap; they cannot price above it.
The phrase is back in the headlines because ministers are reportedly weeks away from approving the Jackdaw gas field in the North Sea.
Whatever that does to wholesale prices, the route from a gas platform to your bill runs through this one mechanism.
The cap limits the price of a unit, not the size of your bill
The most common misunderstanding is that the cap is a ceiling on what a household can pay in a year.
It is not. It caps the unit rate per kilowatt hour and the standing charge per day.
Use twice as much gas as your neighbour and you will pay roughly twice as much, cap or no cap.
The headline annual figure Ofgem publishes is for a "typical" household, which we come to below.
Ofgem resets the cap every three months
The cap was introduced on 1 January 2019 under the Domestic Gas and Electricity (Tariff Cap) Act 2018.
It was originally reviewed twice a year. Since October 2022 it has changed every quarter, on 1 January, 1 April, 1 July and 1 October.
Ofgem announces each new level roughly five weeks in advance, in late February, May, August and November.
The calculation starts with wholesale gas and electricity prices over an observation window of several months.
On top go network costs, government policy costs, supplier operating costs, a modest profit allowance and VAT at 5%.
That is why a wholesale spike takes a quarter or two to reach your direct debit, and why a fall takes just as long to show up.
The headline figure assumes a typical household, and yours is probably not typical
Ofgem's annual number assumes typical consumption of 2,700 kWh of electricity and 11,500 kWh of gas a year, paid by monthly direct debit.
A well-insulated one-bedroom flat uses far less. A draughty four-bedroom Edwardian semi uses considerably more.
Standing charges vary by region, because network costs do. They are also capped, but at different levels across the country.
Customers who pay on receipt of a bill face slightly higher capped rates than direct-debit payers.
Prepayment meter customers have their own capped figures, brought roughly into line with direct debit in 2024.
The cap is a ceiling on what each unit can cost you. The meter still decides the bill.
Around two-thirds of households are on it, and fixed deals sit outside it
If you have never switched supplier, or your fixed deal ended and you did nothing, you are almost certainly on a capped standard variable tariff.
Ofgem estimates that roughly two-thirds of households in Great Britain sit on one of these default tariffs.
Fixed-rate deals are not covered. You agreed a price for a term, and that price may end up above or below the cap.
Northern Ireland has its own regulator, the Utility Regulator, and the Ofgem cap does not apply there.
Support schemes such as the Warm Home Discount are separate from the cap and are applied on top.
How to check what you are paying
Look for the tariff name on your bill or in the supplier's app. Words such as "Standard Variable" or "Flexible" mean you are on the capped rate.
Then compare your unit rates and standing charges with the regional figures Ofgem publishes each quarter.
If they match, you are on the cap. If they are lower, you are on a deal. If they are higher, ask the supplier why.
Bottom line: When a fixed deal ends, suppliers must move you onto a capped tariff, not a penalty rate. Note the end date and compare a month before it arrives.
Ofgem's own page lists the current and upcoming rates by region and payment method.
See the current energy price cap ratesOfgem, the official regulator โ
