🏛️ What Is the Energy Price Cap?

The UK energy price cap is a government-backed limit set by Ofgem that controls how much energy suppliers can charge customers on standard variable tariffs and default tariffs.

What the price cap actually limits:
⚡
Unit Rates

Maximum pence per kWh

📊
Standing Charges

Daily fixed costs

Applies To

Covered by Price Cap

  • Standard variable tariffs
  • Default tariffs after fixed deals end
  • Prepayment meter tariffs (separate cap)
  • Most SVT customers
Not Covered

Excluded from Price Cap

  • Fixed-rate tariffs
  • Specialised or exclusive tariffs
  • Some business energy contracts
  • Green tariffs (usually)

Price Cap vs Fixed Tariffs: Which Is Better?

Price Cap Tariffs

✅ No exit fees
❌ Prices can rise every quarter
❌ Usually not the cheapest option
❌ No price certainty

Best for: Short-term flexibility, imminent movers

Fixed Energy Tariffs

✅ Price certainty for 12-24 months
✅ Often cheaper than the cap
✅ Better budgeting ability
❌ May include exit fees

Best for: Most households seeking value & stability

Price Cap Impact Calculator

Estimate how the price cap affects your bills based on usage

Electricity Usage 3,100 kWh/year
Gas Usage 12,000 kWh/year

Estimated Annual Bill Under Price Cap

£1,850

Based on average regional rates. Actual costs vary by postcode.

Common Myths About the Energy Price Cap

Myth: "The cap means I'm protected from high bills"

Only partially true. The cap limits unit rates, but high usage still results in high bills.

Reality: Your usage determines your bill

The price cap doesn't cap total costs - it only limits the rates you're charged per unit.

Myth: "Everyone pays the same under the cap"

False. Region, meter type, and payment method all affect your capped rates.

Reality: Regional differences still apply

Two identical households in different postcodes pay different amounts even under the cap.

Myth: "There's no point switching if I'm on the cap"

Often incorrect. Many fixed tariffs beat the cap by £200-£500/year.

Reality: Switching usually saves money

In 2026, competitive fixed deals are typically cheaper than price-capped tariffs.

🤔 Should You Stay on the Energy Price Cap in 2026?

✅ Stay on Price Cap If:

  • You plan to move soon
  • You want zero exit fees short-term
  • You're waiting for market changes
  • Your usage is very low

⚠️ Switch from Price Cap If:

  • You want lower bills
  • You prefer predictable costs
  • You seek better long-term value
  • Your usage is average or high

Frequently Asked Questions

How often does the price cap change?

Every three months (quarterly). Ofgem reviews wholesale costs, network charges, and supplier costs to set new limits.

Does the cap mean cheap energy?

No. The price cap is a safety net, not a discount. It prevents extreme pricing but doesn't guarantee good value.

Can I switch away from the price cap?

Yes — and it's often recommended. Switching to a fixed tariff can lock in savings below the capped rate.

Is the price cap going away?

As of 2026, it remains in place while market volatility exists, but it's not a long-term pricing solution.

Don't Settle for the Price Cap

The energy price cap protects you from extreme prices, but active switching often delivers even better value. Compare fixed tariffs that beat the cap in your area.

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✅ Ofgem Protected ✅ No Supply Interruption ✅ Free to Switch