Energy Price Cap Explained (October 2026)

Ofgem price cap rates, 1 October 2026 – 31 December 2026 (Direct Debit)

Annual standing charges alone

What affects the cost

What the energy price cap actually limits

The price cap is a ceiling on the unit rate and standing charge that a supplier can put on a standard variable tariff. The unit rate is the price for each kilowatt-hour (kWh) you use. The standing charge is the fixed daily amount for keeping a property connected, maintaining networks and meeting other supplier costs. You pay the standing charge even when you use no energy. The widely quoted £1,723 figure is not a maximum bill, a fixed tariff or an allowance. It is an illustration based on Ofgem's typical domestic consumption values: 2,700 kWh of electricity and 11,500 kWh of gas a year. A household using twice those amounts will pay substantially more; a low-user household will pay less, although standing charges put a floor under the saving. The cap regulates prices rather than consumption. This distinction matters when budgeting because two similar homes can receive very different bills. Household size, insulation, heating controls, working patterns, appliances and weather all change demand. Use the calculator above with annual kWh from a recent statement for a much more useful estimate than the headline typical bill.

Who the cap applies to

The cap protects households in England, Scotland and Wales on standard variable and default domestic tariffs. It normally covers customers who pay by Direct Debit, standard credit and prepayment, but each payment method has its own capped rates. Direct Debit headline rates should not be copied into a budget if you pay after receiving a bill or use a prepayment meter. If you have a fixed tariff, the cap does not rewrite the prices in your contract. Your fixed unit rates normally continue until the deal ends, unless the supplier's terms say otherwise. When a fix ends, the supplier may move you to its standard variable tariff, where the cap then applies. The cap also does not apply to Northern Ireland, which has a separate energy market. Business tariffs are outside the domestic cap. Some unusual domestic arrangements can also work differently, including heat networks where residents buy heat from a building operator rather than buying gas or electricity directly. Check the tariff name, payment method and unit rates shown on your own statement before relying on a national average.

How to estimate your own capped bill

Start with annual electricity and gas use in kWh, not the amount of the last Direct Debit. A monthly payment can include credit, debt recovery or a supplier estimate, so it does not necessarily equal the energy used that month. For electricity, multiply annual kWh by 26.32p and divide by 100. Then add 54.83p multiplied by 365 and divided by 100. Repeat the calculation for gas using 7.97p and 29.68p. Add the two fuel totals. The calculator above performs the same arithmetic and lets you replace the default consumption with your figures. For example, electricity unit costs for Ofgem's typical 2,700 kWh are about £711, before the electricity standing charge of £200 a year. Gas unit costs for 11,500 kWh are about £917, before the gas standing charge of £108. Your supplier's regional rates, rounding and payment method can make the final figure different. For a monthly planning figure, divide the annual estimate by 12, but remember that real use is seasonal. Gas-heated homes usually consume much more energy in winter. A flat monthly Direct Debit spreads this uneven cost over the year; it does not mean you used the same amount each month.

Why your rates may differ from the headline

Ofgem publishes national averages, while suppliers set capped schedules for different regions and payment methods. Electricity network charges vary across Great Britain, so a household in one distribution region can have a different unit rate or standing charge from a household elsewhere. The mix between unit rate and standing charge can also vary while remaining within the regulatory calculation. Payment method matters. Direct Debit is generally the lowest-cost capped method because regular automated payments reduce supplier administration and payment risk. Standard credit, where you pay after a bill arrives, can cost more. Prepayment has its own cap. Economy 7 and other multi-rate tariffs use separate day and night prices rather than one simple national rate. Your statement is therefore the authoritative source for your home. Look for prices in pence per kWh and pence per day, including any separate day/night rates. Enter those figures in calculators whenever possible. The figures on this page are a consistent GB-average benchmark, useful for comparison but not a replacement for your tariff schedule.

Price cap, fixed tariff or tracker tariff

A fixed tariff gives price certainty for its stated term, but it does not guarantee a lower bill. Compare its unit rates and standing charges with the current cap, then consider what would happen if capped rates moved up or down. Check the end date, exit fee and whether the quoted saving assumes a particular payment method. A standard variable tariff follows the cap when each quarterly period begins. It gives flexibility and usually has no exit fee, but future prices are uncertain. A tracker tariff follows a published index or formula and may move more often. Time-of-use tariffs charge different prices at different hours and can help households able to shift vehicle charging, laundry or water heating away from peak periods. Do not compare tariffs using only the supplier's estimated monthly payment. Use annual kWh and compare the full annual cost at each tariff's unit rates and standing charges. Also check whether rates are fixed, whether there are multiple time bands, and whether an exit fee would remove the apparent saving. A tariff decision is about price and risk; the cap is a protection for default prices, not an automatic recommendation to stay on them.

When the price cap changes next

Ofgem reviews the cap every three months, with new periods starting on 1 January, 1 April, 1 July and 1 October. It normally announces each decision several weeks before the rates take effect. The next period begins on 1 January 2027. We update this page, its source data and every connected calculator when confirmed figures are published. Take meter readings close to the change date and submit them to your supplier. This helps allocate consumption to the correct old and new rates, particularly if you do not have a communicating smart meter. Photograph the readings and keep the confirmation. Check the first statement after the change for the correct prices and dates. When a new cap is announced, recalculate using your own annual consumption rather than focusing only on the percentage movement in the headline bill. Unit rates and standing charges may not move by the same proportion, so the effect can differ for a low-use flat and a large gas-heated house.

How to reduce the cost

• Submit meter readings on the day the cap changes
• Compare fixed tariffs against the cap
• Pay by Direct Debit to get the lowest capped rate
• Check whether you qualify for the Warm Home Discount
• Cut usage in winter with a lower thermostat and draught-proofing

Frequently asked questions

Sources and methodology

Energy prices come from the Ofgem price cap for Direct Debit customers (GB average). Installation costs are typical UK ranges from installer quotes and industry guidance, rounded. Savings use today's rates and do not predict future prices.

• Ofgem — Energy price cap rates
• Ofgem — Energy price cap unit rates and standing charges
• Ofgem — Changes to the price cap, October to December 2026
• Energy Saving Trust

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