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Blog Post 26 August 2022 Updated 31 May 2024

What is the energy price cap?

Location notice

Please note that this page contains information and links most relevant for people living in England, Scotland, Wales.

Between 1 April and 30 June 2024, annual energy bills for a typical dual-fuel direct debit household in Great Britain are around £1,690.

And Ofgem has announced that average energy bills from 1 July to 30 September 2024 will be £1,568 a year. This is £122 less than the previous quarter.

But what is price cap? 

The energy price cap is set by Ofgem, the body that regulates energy suppliers in Great Britain.

The cap limits the maximum amount energy suppliers can charge you for each unit of energy you use if you live in England, Scotland and Wales. In Northern Ireland, the Utility Regulator regulates energy suppliers and sets the equivalent of the price cap.

Ofgem introduced the price cap in 2019 because there was a concern that people were paying too much for their energy. The price cap is currently reviewed every three months.

How does the energy price cap work?

The cap limits the amount that a supplier can charge for their default tariff. It includes:

  • The standing charge (a fixed daily amount you have to pay for energy, no matter how much energy you use).
  • The price for each unit of electricity and gas (measured in pence per kilowatt hours, or p/kWh).  

To show what this might look like for an average household, Ofgem uses a figure of 12,000kWh for a household’s annual gas use and 2,900kWh for annual electricity use.

However, this is just a guide. Each household is different because everyone uses different amounts of energy.

How you pay for your energy and the type of energy meter you have can also change how much you pay.

What is the current price cap?

For three months from 1 January 2024, the following rates and charges will apply.

Electricity

  • Unit rate: 24.50p per kWh
  • Standing charge: 60.10p per day

Gas

  • Unit rate: 6.04p per kWh
  • Standing charge: 31.43p per day

Does the energy price cap apply to me?

The price cap applies to you if: 

  • You’re on a default energy tariff, regardless of how you pay your bills. 

A default energy tariff, according to Ofgem, is the most basic tariff an energy supplier offers. The most common type is a ‘standard variable’ tariff. This means the amount you pay is subject to price changes, although your supplier should write to you to confirm any changes with a notice period. A standard variable tariff can’t be higher than the price cap.  

Energy suppliers have different names for their default tariffs. If you aren’t sure what tariff you’re on, your energy supplier will be able to tell you. 

The price cap doesn’t apply to you if: 

  • You’re on a fixed-term energy tariff (ie a tariff with a fixed end date and agreed fixed per unit price). 
  • Your tariff is exempt from the price cap. For example, some green and special time of use tariffs. 

If you’re not sure what tariff you’re on, check your energy bill or contact your energy supplier.

If your supplier has recently gone bust and you were moved to a new supplier, it’s likely you’re on a standard variable tariff.

Similarly, if you’ve come to the end of a fixed term contract, or are about to, it’s likely you’re on a standard variable tariff or will be moved to one. 

Why is the price cap now every three months?

Reviewing the price cap every three months means that energy companies can adjust bills quicker in response to the prices they’re charged by wholesale suppliers.

This should also stop more energy companies from going bust, the cost of which added an extra £164 on to our energy bills in 2021.

Can I get help to pay my energy bills?

We know that for many households the price of energy bills is still a worry.

Millions of people are already saving energy and money by following our quick tips and advice. 

If you’re struggling to pay your energy bills, here’s what help is available across the UK.

Last updated: 31 May 2024