What is the Energy Price Cap?

How does it work and how much is it?

The Energy Price Cap, which controls what most households pay for energy, fell by 12% on average from Monday 1 April 2024. We've full info below on what the Cap is and how it works.

What is the Price Cap? How does it work? How much is it? Plus much more

The Price Cap was introduced on 1 January 2019 by regulator Ofgem, with the aim of preventing the millions of households on expensive variable tariffs from being ripped off.

It limits what you pay for each unit of gas and electricity that you use, plus it sets a maximum daily standing charge (what you pay to have your home connected to the grid). It's based largely on wholesale energy prices (those that firms pay) and applies only to providers' standard and default tariffs, which the vast majority of households are now on.

On Monday 1 April, the Price Cap fell to £1,690 a year for a typical use household paying by Direct Debit. Though remember, it's the rates that are capped, so use more and you pay more. To see how this will affect your bill, see our Energy Price Cap calculator.

  • When and how will the Price Cap next change?

    The Energy Price Cap fell by 12% on Monday 1 April, to £1,690 a year for a typical dual-fuel household paying by Direct Debit (based on Ofgem's new, lower typical use figures). 

    While rising energy bills will be a worry for many, bear in mind that each Price Cap only last three months, and the Cap is predicted to fall again in July 2024.

    Energy Price Cap changes

    Time period

    Price Cap on typical use (1)

    CURRENT PRICE CAP

    1 Apr 2024 to 30 Jun 2024

    DOWN 12% 

    £1,690 a year

    1 Jul 2024 to 30 Sep 2024

    Strong prediction (2)

    DOWN 8% 

    £1,560 a year

    1 Oct 2024 to 31 Dec 2024

    Weak prediction (2)

    UP 5%

    £1,631 a year

    1 Jan 2025 to 31 Mar 2025

    Crystal-ball gazing (2)

    UP 0.2%

    £1,634 a year

    Based on a dual-fuel household paying by Direct Debit. (1) 2,700 kilowatt hours of electricity, 11,500 kilowatt of gas. (2) According to the latest prediction (on 28 March 2024) from analysts at Cornwall Insight.

  • What are the Price Cap assessment periods?

    The Price Cap changes every three months, in January, April, July and October.

    Price Cap changes are largely based on the costs suppliers face for providing energy – though there are a number of other factors that affect the Cap.

    Do note it has also given itself the power to change the Cap at points during 'exceptional circumstances'.

    Energy Price Cap timings and wholesale assessment periods

    Price Cap period  Date announced Wholesale assessment period
    NEW Price Cap:
    1 April to 30 June 2024
    23 February 2024  16 November 2023 to 15 February 2024 
    1 July to 30 September 2024  28 May 2024 16 February to 16 May 2024 
    1 October to 31 December 2024  27 August 2024 17 May to 16 August 2024
    1 January to 31 March 2025 TBC 19 August to 15 November 2024
    1 April to 30 June 2025 TBC 18 November 2024 to 17 February 2025
  • What are the unit rates and standing charges under the Price Cap?

    The Price Cap sets a limit on the rates you pay. For a region-by-region breakdown of what you're currently paying, see our Energy Price Cap rates guide.

    The table below shows the average unit rates per kilowatt hour (kWh) and standing charges per day (these vary by region) under the new Price Cap from 1 April to 30 June 2024.

    What are the average standing charges and unit rates for gas and electricity from 1 April to 30 June 2024?

      Gas Electricity
    Direct Debit

    Unit rate: 6.04p per kWh

    Standing charge: 31.43p per day

    Unit rate: 24.50p per kWh

    Standing charge: 60.10p per day

    Prepayment 

    Unit rate: 5.82p per kWh

    Standing charge: 31.43p per day

    Unit rate: 23.72p per kWh

    Standing charge: 60.10 per day

    On receipt of a bill

    Unit rate: 6.36p per kWh

    Standing charge: 35.21p per day

    Unit rate: 25.79p per kWh

    Standing charge: 65.88p per day

    Rates and standing charges are averages, which vary by region.
  • What are daily standing charges for?

    You have to pay to have access to energy even if you don't use it through what's known as the daily standing charge. If you've both gas and electricity, the average Direct Debit standing charge is currently £334/year before you use owt.

    MoneySavingExpert.com (MSE) and its founder Martin Lewis have long campaigned for standing charges to be lowered, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage.

    Ofgem launched a public review, of these charges, asking bill-payers, suppliers, charities and consumer groups for their views on standing charges and how an alternative system could work.

    It's also worth noting there are variances in standing charges by region (for example, if paying by Direct Debit in London it's £266/year, in Northern Region it's £375/year) – Ofgem says it is due to the different costs to transport power to where you live.

  • How does the Energy Price Cap work?

    The Price Cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity you use, and sets a maximum daily standing charge (what you pay to have your home connected to the grid).

    That means there's no upper limit to what you actually pay – if you use more energy, you'll pay more, use less and you'll pay less.

    It only applies to providers' standard and default tariffs, so if you're on a fixed-term energy deal, the Cap doesn't apply (although those who prepay for their energy did get a small discount on standing charges under the Energy Price Guarantee, but that ended on Sunday 31 March and prepay unit rates and standing charges have been lowered in line with Direct Debit customers, without the need for a discount to be applied).

    If you've not switched in the last year or so, it's likely you're on a capped tariff.

  • How has the Price Cap changed over time?

    The Energy Price Cap now changes every three months (previously it was every six) – mainly based on average energy wholesale prices in the months leading up to each change (see How is the Price Cap calculated? for more info). As a result, the average price of the Cap, based on typical use, has fluctuated since it was first introduced in 2019.

    It's worth noting that between October 2022 and June 2023, no one paid the full amount under the Price Cap, as prices were discounted under the Energy Price Guarantee (EPG) scheme.

    How the Energy Price Cap has changed

      Monthly Direct Debit  Prepayment (1)  Other payment method
    2024 spring
    (1 April to 30 June)
    £1,690/year £1,643/year £1,796/year
    2024 winter
    (1 Jan to 31 March)
    £1,928/year £1,917/year (2)
    £2,058/year
    2023 autumn
    (until 31 December)
    £1,834/year  £1,821/year (2) £1,959/year
    2023 summer
    (until 30 September)
    £1,976/year £1,982/year (3) £2,108/year
    2023 spring
    (until 30 June)
    £3,116/year £3,162/year £3,309/year
    2023 winter
    (until 31 March)
    £4,059/year £4,138/year £4,301/year
    2022 autumn
    (until 31 December)
    £3,371/year £3,431/year £3,577/year
    2022 summer £1,877/year £1,924/year £2,002/year
    2021/2022 winter  £1,216/year £1,248/year £1,304/year
    2021 summer £1,084/year £1,104/year £1,165/year
    2020/2021 winter £993/year £1,022/year £1,069/year
    2020 summer £1,073/year £1,112/year £1,153/year
    2019/2020 winter £1,089/year £1,128/year £1,170/year

    Based on Ofgem figures for typical dual-fuel use. Under the twice-yearly changes, winter Price Caps last from 1 October to 31 March, summer Price Caps last from 1 April to 30 September. From October 2022, the Price Cap changes every three months with a winter Price Cap from 1 January to 31 March, spring from 1 March to 31 May, summer from 1 June to 30 September and autumn from 1 October to 31 December. (1) The prepayment Price Cap has been in place since 2017, we've only shown 2019 onwards for comparison against other payment methods. (2) This includes a small discount on the Price Cap standing charges from the Government through the EPG. (3) This includes a small discount on the Price Cap gas rates from the Government through the EPG.

  • How do I know if I'm on a price-capped tariff?

    The Price Cap applies to 'default' tariffs – ones you don't actively choose to switch to – whether you pay by Direct Debit, cash or cheque, or prepayment. These tariffs are generally known as standard variable tariffs (SVTs), and you'll be on one if any of the below apply.

    But right now, due to the energy crisis, almost everyone is on a price-capped. You'll be on a price-capped tariff if:

    • You've never switched your energy tariff. You would have always been on your supplier's standard tariff, so you will be protected by the Price Cap.

    • You were on a fixed deal, but haven't chosen to switch again. If you have previously chosen a fixed deal, once the fix period ends you will be automatically rolled on to a price-capped tariff if you do nothing.

    • You were with a supplier that has gone bust. In most cases, if your supplier goes bust, your existing tariff with that supplier will end, Ofgem will pick a new supplier to take over and you'll be moved to that provider's standard tariff, which is protected by the Price Cap.

    • You're moving home. Usually when you move home, your current tariff will end when you let your supplier know you're moving out (a few let you transfer fixed deals, so do check).

      You'll then need to contact the existing supplier of the property you're moving into, to let them know when you moved in and to set you up with a new account. From the date you moved in, you'll be placed on a 'default' tariff, which is controlled by the Price Cap.

    The Price Cap also doesn't apply to any standard variable tariffs that have an exemption to the Price Cap (this is only for very green deals, and you still have to choose to be on them).

  • Does the Price Cap change depending on how I pay?

    Yes. The Price Cap is set differently for those that pay by monthly Direct Debit, those that pay quarterly or on the receipt of a bill, and for those that prepay for their energy:

    • If you pay by Direct Debit, from 1 April to 30 June 2024, the Price Cap for a typical household is £1,690 a year. 

    • If you pay by cash, cheque or quarterly Direct Debit, the Price Cap is £1,796 a year on typical use. Ofgem says this is higher than paying by Direct Debit to reflect the additional costs from suppliers to bill those that don't pay by monthly Direct Debit.

    • If you prepay for your energy, the Price Cap is £1,643 a year on typical use. In July last year, the Government committed to end the 'prepay premium' so from 1 April 2024, Ofgem will has lowered standing charges to be the same level as those who pay by Direct Debit.
  • How is the Price Cap calculated?

    The Price Cap is calculated based on a range of costs energy suppliers face. The largest cost is wholesale energy – what energy suppliers pay for gas and electricity. This accounts for about 43% of a typical bill for a tariff priced at the maximum allowed under the current Price Cap from 1 April to 30 June 2024.

    It's also what causes most of the change to the Price Cap every three months, as wholesale prices are constantly fluctuating.

    Other elements include things such as the costs of maintaining the pipes and wires that carry gas and electricity, or the operating costs suppliers face for billing customers and providing metering services. See the full list below.

    Ofgem can also add on any unexpected costs to the Price Cap

    There's also what's known as an 'adjustment allowance', which allows Ofgem to factor any special, unexpected costs into the price – for example, Ofgem has added the costs resulting from the spate of suppliers that failed in winter 2021/2022 to the Price Cap. About £28 of the typical £1,690 a year bill under the current Price Cap is for supplier failures.

    Other costs include network, operating and policy costs

    Other than wholesale energy costs and the special adjustment allowances, the Price Cap is also made up of the following:

    • Network costs. This is the costs suppliers face for building, maintaining and operating the pipes and wires that carry energy to households. It accounts for about 22% of a typical bill under the current Price Cap.

    • Operating costs. This covers the cost of billing and metering services, including the cost of the smart meter rollout. It accounts for about 13% of the current Price Cap on typical use.

    • Policy costs. This is to support Government environmental and social schemes to help households save energy, to reduce emissions and to encourage homes to get solar panels and similar renewable energy tech. It accounts for about 11% of a typical bill under the current Price Cap.

    • VAT. For energy, this is set at 5%, which is added to the price of all tariff rates.

    • Earnings. This is the part of the bill that is profit for a supplier – Ofgem says it allows for a 'fair rate of return' for suppliers. It accounts for around 2% of a typical bill under the Price Cap.

    • Payment method allowance. This is to cover the cost of taking monthly Direct Debits, billing people quarterly by cash, cheque or Direct Debit, or billing by prepayment. How much this is depends on the payment method – for those on the monthly Direct Debit cap, it's under 1%. For those paying by quarterly Direct Debit, cash or cheque, it's a lot more.

    • Other costs. There are a few other small costs Ofgem accounts for, such as what's known as a 'headroom allowance', which is supposed to help with any unexpected costs.
  • How long will energy prices be capped for?

    When it was first introduced, the Cap was set to remain in place until at least the end of 2020, although the Government has announced its intention to allow the Price Cap to be extended beyond 2024 if required.

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