The energy price cap, explained
Guide · updated 2026-08-23
The price cap does not cap your bill. It caps the unit rate and standing charge on a standard variable tariff — use more energy and you pay more, without limit.
The number in the headlines is a worked example
When the news reports a cap of "£X a year", that is the annual bill for a household with typical consumption, paying by direct debit, on both fuels. Ofgem's typical domestic consumption values are around 2,700 kWh of electricity and 11,500 kWh of gas a year for a medium household.
Your bill is only that number if your usage is that usage. What is genuinely capped is the unit rate and the standing charge, separately, for each fuel and each region and each payment method.
What it does not cover
- Fixed tariffs. Once you fix, you are outside the cap for the term — which can be better or worse than the cap during it.
- Most smart and time-of-use tariffs, including Agile, which has its own separate cap of 100p/kWh rather than Ofgem's.
- Business supplies, which have no cap at all.
- Your total spend — there is no cap on the size of a bill, only on the rates that build it.
It changes every three months
Ofgem resets the cap quarterly, announcing each level roughly six weeks before it takes effect, in time for people to decide whether to fix. The level is driven mostly by wholesale energy costs in a fixed observation window before the announcement, which is why the cap lags the market rather than tracking it.
Because it lags, the cap is often the wrong price at the moment it lands: too high when wholesale has already fallen, too low when it has already risen. That gap is the whole opportunity in fixing, and the whole risk.
Should you stay on a capped tariff?
Being capped is a floor on how badly you can be treated, not a promise of a good price. A fixed deal below the cap is strictly better while it lasts; a time-of-use tariff can beat the cap substantially if you can move usage, and lose to it if you cannot.
The only way to know for your household is to price your own consumption against each option. If you are with Octopus, compare does exactly that using your real half-hourly readings.
Common questions
Does the price cap limit my total bill?
No. It limits the unit rate and daily standing charge on a standard variable tariff. If you use more energy, you pay more, with no upper limit on the bill itself.
How often does the energy price cap change?
Ofgem resets it every three months, and announces each new level about six weeks before it takes effect.
Are fixed tariffs covered by the price cap?
No. Fixing takes you outside the cap for the length of the term, which can work out cheaper or more expensive than the capped rate.
See it on your own numbers. halfhourly.uk shows live half-hourly prices for every GB region for free, and if you connect an Octopus account it prices your own smart-meter readings against every tariff.