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Understanding the Ofgem energy price cap, how it works, what it covers, and how it affects your energy bills.
The energy price cap is a limit set by Ofgem (the energy regulator) on how much suppliers can charge customers on default or standard variable tariffs. It sets a maximum price per unit of energy and a maximum daily standing charge.
It's designed to protect consumers from paying excessively high prices, especially when they haven't actively chosen a tariff or when market prices are volatile.
The price cap sets maximum prices for:
It applies to customers on:
The cap doesn't set a maximum total bill—your total cost still depends on how much energy you use.
Ofgem (the Office of Gas and Electricity Markets) sets the price cap. They review it every three months and adjust it based on:
The price cap is reviewed and updated every three months:
These changes are announced a few weeks in advance, so you'll know if your bills are going up or down.
The price cap applies to:
It does not apply to:
The price cap protects you from extremely high prices, but it's not necessarily the cheapest option. You can often find:
It's worth shopping around, especially when your fixed deal ends, to see if you can get a better price than the cap.
If wholesale energy costs fall, the price cap will be reduced. However, if you're on a fixed-rate tariff, you won't benefit from the lower cap until your fixed deal ends.
If you're on a variable tariff, your supplier should reduce your prices when the cap goes down, but they're not required to pass on the full reduction—only to stay below the cap.
Energy & Utilities Writer
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