What Is the Ofgem Price Cap and How Does It Affect Your Bill?

The Ofgem price cap is mentioned in almost every news story about energy bills, yet many people believe it limits the total amount they can be charged. It does not. This guide explains what the cap actually controls, how it is set and how to make sense of the headline figures.

What the cap limits

The price cap sets the maximum a supplier can charge per unit of energy (the unit rate, in pence per kWh) and the maximum daily standing charge on standard variable tariffs in Great Britain. It is a cap on prices, not on spending. If you use twice as much gas as your neighbour, you will pay roughly twice as much, even though you are both charged the same rates.

The cap does not apply in Northern Ireland, which has a separate energy market and regulator.

Where the "typical household" figure comes from

When you see a headline figure for the cap, it is the annual cost for a household with typical energy use paying by direct debit. At the time of writing (October 2026), Ofgem announced that this typical figure is £1,723 a year for the period from 1 October to 31 December 2026, a 4 per cent increase on the previous quarter. Your own bill will be different, because the typical figure is based on a set amount of gas and electricity that may be far higher or lower than yours.

A single person in a small flat may use well below the typical amount, while a large family home with electric heating may use much more. To estimate your own cost, you need your unit rates, your standing charges and your annual usage in kWh, all of which appear on your bill or online account.

How often it changes

Ofgem reviews the cap every three months. It announces the new level ahead of each quarter, based on wholesale energy costs and other costs suppliers face, including network charges, government policy costs and a margin for suppliers. That is why bills can move up or down even if you change nothing.

Which tariffs the cap applies to

• Standard variable tariffs: the cap applies directly. Your rates follow the cap each quarter.
• Default tariffs: if you have never switched or your fixed deal ended, you are usually on a variable tariff covered by the cap.
• Fixed tariffs: the cap does not apply. Your rates are locked for the term, so they may be higher or lower than the cap while the deal lasts.
• Prepayment meters: the cap covers these too, with its own level reflecting the cost of providing them.

Is the price cap a good price?

The cap is a protection against excessive charging, not a promise of the cheapest deal. Sometimes fixed tariffs have been available below the cap, and sometimes above it. Comparing current deals against your present variable rates takes only a few minutes and tells you whether a fixed deal would be better for you.

What the cap does not include

The cap does not cover extra services you buy separately, such as boiler cover or smart-home products, and it does not reduce your usage. The best way to lower your total bill is to use less energy, and our low-cost energy saving guide is a good place to start.

How to use the cap in practice

1. Find your current unit rates and standing charges on your latest bill.
2. Compare them with Ofgem's published cap rates for your region, which vary across Great Britain.
3. Work out your annual usage in kWh and multiply it by your unit rate, then add the standing charge for the year.
4. Compare fixed deals using the same usage figures, remembering to check for exit fees.

Knowing how the cap works means you can read the next headline critically, and decide calmly whether to stay put or look for a different deal.