The UK energy price cap, explained

What the price cap actually caps

Ofgem, the energy regulator, sets a cap on the rates a supplier can charge on a standard variable tariff. It limits the price per unit of gas and electricity, plus the daily standing charge. It does not cap your total bill. If you use more, you pay more, cap or no cap.

The widely quoted figure (around £1,700 a year at recent levels) is for a household with typical usage paying by direct debit. Your own bill depends on how much energy you actually use.

How often it changes

The cap is reviewed every three months and takes effect on 1 January, 1 April, 1 July and 1 October. Ofgem announces each new level about six weeks ahead, so you usually get warning before a change lands.

Standing charge vs unit rate

• Standing charge: a fixed daily fee you pay whatever you use, covering the cost of maintaining the network and your connection.
• Unit rate: the price per kWh of energy. This is where using less makes a direct difference.

Both are capped on a standard variable tariff. Low users sometimes feel the standing charge keenly because it is the same regardless of consumption.

Does the cap mean you are on the best deal?

No. The cap is a ceiling, not a target. A competitive fixed tariff can sit below the capped variable rate, and it locks your rates for the term. If you are on a standard variable tariff simply because a fixed deal ended, it is worth comparing energy deals to see whether you can do better.

Fixing against the cap

When the cap looks likely to rise, a fixed tariff can protect you, since your rates stay put while the cap moves up. The trade-off is a possible exit fee if you leave early. Weigh the certainty against the flexibility, and look at dual fuel options if you take both gas and electricity from one supplier.

The bottom line

The price cap limits rates on the default variable tariff, updates quarterly, and protects you from the worst pricing if you do nothing. It is a safety net, not a best buy. Compare fixed deals against the cap, and remember the cap controls rates, not your total spend.