The Ofgem energy price cap is one of the most talked-about and least-understood aspects of UK energy bills. Most people think it caps the total amount they pay — it does not. Here is exactly what it does, how it is calculated, and what it means for your household in 2026.

What the Price Cap Actually Controls

The price cap limits the unit rate and standing charge your supplier can charge on a standard variable tariff. It does not cap your total bill — if you use more energy, you pay more. Ofgem sets it based on the cost of wholesale gas and electricity, supplier operating costs, network charges, and government levies. The cap is updated quarterly: April, July, October, January.

Q2 2026 Cap Rates

• Electricity unit rate: 24.5p per kWh
• Electricity standing charge: 61p per day
• Gas unit rate: 6.24p per kWh
• Gas standing charge: 31p per day

For a typical household using 2,700 kWh of electricity and 11,500 kWh of gas annually, this equates to approximately £1,849 per year.

Who the Cap Applies To

The cap applies to households on standard variable tariffs — which is the majority of UK households. If you are on a fixed tariff, your rates are set by your contract, not the cap. However, the cap indirectly influences fixed tariff pricing because suppliers set fixed deals relative to where they expect the cap to go.

How the Cap Has Moved Since 2021

In October 2021 the cap stood at around 1,277/year equivalent. By Q1 2023 it had reached £3,280 at the height of the energy crisis. It has since fallen substantially, but remains significantly above pre-crisis levels. Understanding this trajectory helps put current bills in context — bills are lower than the 2022-23 peak but still roughly 45% higher than 2020 levels.

What Happens at the Next Cap Review?

Ofgem will announce Q3 2026 (July) cap rates in late May. Early analyst forecasts suggest a modest 3-5% increase driven by wholesale gas market movements. If confirmed, a typical household on a variable tariff would pay around £55-£90 more per year from July. Fixing now could protect you from that rise — if you can find a deal below the current cap rate. Ready to cut your energy costs? Compare deals today.