Last updated: 29 July 2026 · Sourced from official UK government publications
This is a plain-English definitions guide. All figures and rules are drawn from Ofgem official sources. This is not financial advice, see the disclaimer below.
The energy price cap is one of the most talked-about things in UK household finance, and also one of the most misunderstood. The biggest misconception: it doesn’t cap your total bill. Here’s what it actually does, in plain English.
The energy price cap sets a maximum unit rate that suppliers can charge for gas and electricity, and a maximum standing charge. It does not cap your total bill, that still depends on how much energy you use. A household using more than the Ofgem typical average will pay more than the headline annual figure, even under the cap.
Think of it like a maximum price per litre of petrol. The cap controls the price per unit, not how many units you use. A larger home or a family that uses more heating will always pay more than a smaller household, even if the cap is the same.
The current cap is £1,663 a year for a typical dual-fuel household paying by direct debit, and it runs from 1 July to 30 September 2026. Ofgem announced it on 27 May 2026. The cap for 1 October to 31 December 2026 will be published by 26 August 2026.
Here is the part almost every headline gets wrong. The previous cap, covering 1 April to 30 June 2026, was £1,641 a year. Putting £1,641 and £1,663 side by side makes the change look tiny, close to flat. It was not. Ofgem headlined this review as a 13% increase.
The two numbers are not directly comparable because Ofgem changed the yardstick at the same time. The cap level is expressed as the annual bill of a household using a set amount of gas and electricity, and in this review Ofgem updated those typical usage assumptions: typical households now use around 7% less electricity and around 17% less gas than the old assumption. In Ofgem’s own words, under the previous usage assumptions the typical bill from July would have been £1,862, up from £1,641. Lower assumed usage priced at higher rates lands at £1,663.
So the rates went up a lot, and the assumed consumption went down a lot, and the headline number barely moved. What you actually pay depends on your rates and your usage, not on the headline. Underneath, electricity prices rose around 5% and gas prices rose around 24%, so a home heated by gas felt this far more than an all-electric flat.
| Charge | From 1 July 2026 |
|---|---|
| Electricity unit rate | 26.11p per kWh |
| Electricity standing charge | 57.19p per day |
| Gas unit rate | 7.33p per kWh |
| Gas standing charge | 29.04p per day |
Those are the cap-level figures. The exact maximum you can be charged varies by region and by how you pay, so the numbers printed on your own bill will not match them precisely. They are the ones to check your bill against, though, far more usefully than the annual headline, because they are what the cap actually controls.
Energy is one of the reasons your personal cost of living can rise faster than the published CPI inflation rate, which was 2.6% in the 12 months to June 2026. A 24% rise in gas prices does not show up as 24% on the national figure, because gas is only one line in a basket of around 700 things.
Ofgem (the Office of Gas and Electricity Markets) is the UK’s energy regulator. It sets the price cap and reviews it every three months based on wholesale energy prices on global markets. When gas prices spike, as happened after Russia’s invasion of Ukraine, the cap rises. When wholesale prices fall, the cap follows.
Ofgem is a regulator, not the Bank of England, and the two work on completely different levers. The Bank sets the base rate to steer inflation across the whole economy. Ofgem sets a maximum price for one specific thing. That is why your energy bill can jump in a quarter when the base rate has not moved at all.
The cap sets maximum permitted levels for the electricity unit rate (pence per kWh), the gas unit rate (pence per kWh), and the daily standing charges for both fuels. It applies to customers on standard variable tariffs, the default for most households who have never switched. Customers on fixed-price deals are unaffected until their deal ends.
Ofgem sets maximums for:
The standing charge is the one that catches people out. It is charged every single day whether you use any energy or not, so a student flat that is empty over the summer still runs up a bill. On the current cap that is 57.19p a day for electricity and 29.04p a day for gas, before a single unit is used.
Your annual bill is roughly:
(electricity unit rate × electricity units used) + (electricity standing charge × 365) + (gas unit rate × gas units used) + (gas standing charge × 365)
Ofgem publishes a ‘typical household’ figure based on average usage, that’s the headline number you see reported in the news. But your actual bill will be higher or lower depending on your home and usage.
Two things follow from that formula. First, the standing charge part is fixed, so cutting your usage to nothing does not cut your bill to nothing. Second, because gas and electricity have separate unit rates that move by different amounts, a review that is bad for gas can be mild for electricity. In the July 2026 review gas rose far more than electricity, which is why homes with gas central heating felt it most.
Worth remembering that energy is paid out of take-home pay, so it sits behind whatever income tax and National Insurance have already come off your wages. Anything you set aside towards bills in advance can sit in a cash ISA, where the interest is tax free, and the annual ISA allowance for 2026/27 is £20,000.
Ofgem reviews and resets the price cap every three months, with new levels taking effect on:
Each change reflects wholesale energy costs over the preceding period, and Ofgem announces the new level several weeks before it starts. The cap now in force, covering 1 July to 30 September 2026, was announced on 27 May 2026. The next one, covering 1 October to 31 December 2026, will be published by 26 August 2026. Kvanta covers every announcement the morning it’s confirmed.
Because the announcement lands well before the change, there is normally a window where you know what the new rates will be while still paying the old ones. That is also when suppliers reprice their fixed deals, since they can see the same numbers you can.
No. The price cap applies only to customers on standard variable tariffs and prepayment meters. Customers on a fixed-rate deal have their unit rate and standing charge locked for the duration of that deal, regardless of how the cap moves. Whether a fixed tariff turns out cheaper or more expensive than the cap depends on the rates agreed at the time and how wholesale prices move during the fixed period, which nobody knows in advance.
Fixing trades certainty against the chance of a lower cap later, and it cuts both ways: a fix taken before a cap rise looks good, and the same fix taken before a cap fall looks expensive. Renting complicates it further, because in a lot of shared houses only the tenant named on the account can change the tariff at all.
Ofgem publishes guidance on energy tariff types at ofgem.gov.uk. The government’s energy-saving advice, including information on insulation schemes and efficiency measures, is published at gov.uk/improve-energy-efficiency. If you own rather than rent, energy sits alongside the other running costs of a property covered in the guide to how a UK mortgage works.
The Ofgem energy price cap is £1,663 a year for a typical dual-fuel household paying by direct debit, covering 1 July to 30 September 2026. Ofgem announced it on 27 May 2026. The previous cap, for 1 April to 30 June 2026, was £1,641 a year. The gap between those two headline numbers understates the actual price rise, because Ofgem also updated its typical household usage assumptions in the same review. Ofgem headlined the change as a 13% increase, with electricity prices up around 5% and gas prices up around 24%. The cap for 1 October to 31 December 2026 will be published by 26 August 2026.
The Ofgem energy price cap limits the unit rates and standing charges that suppliers can charge customers on default tariffs. It does not set a maximum total bill. Because households use different amounts of energy, actual bills vary. Someone who uses more energy than the Ofgem typical household assumption will pay more than the headline annual figure Ofgem publishes.
Ofgem reviews and updates the energy price cap every three months, with new levels taking effect in January, April, July, and October each year. Each adjustment reflects changes in wholesale energy costs over the preceding period. Ofgem announces the new cap level several weeks in advance, giving households time to anticipate any change to their bills.
No. The headline figure Ofgem publishes, currently £1,663 a year for 1 July to 30 September 2026, describes what a typical dual-fuel household paying by direct debit would spend over a year at the capped rates. It is not a maximum bill. Ofgem sets the typical usage assumption itself and revised it in the July 2026 review. Households that use more energy than the assumption pay more. The cap limits the rate charged per unit and the daily standing charge, not the total amount a household can be billed over a year.
The price cap applies to all Ofgem-licensed gas and electricity suppliers in Great Britain for customers on standard variable tariffs and prepayment meters. Customers on fixed-rate tariffs that were agreed before a cap change are generally protected by the terms of their fixed deal, which may be above or below the prevailing cap rate.
The unit rate is the amount charged per kilowatt-hour (kWh) of energy consumed. The standing charge is a fixed daily fee applied regardless of how much energy is used, covering network maintenance and supply costs. The energy price cap sets maximum permitted levels for both of these components, and the specific rates can vary by region across Great Britain.
Ofgem announces cap changes every quarter. Kvanta covers each one the morning it happens, what it means for your bills, in plain English.
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