The UK Energy Price Cap
The Energy Price Cap is a limit set by Ofgem, the UK government’s energy regulator on how much suppliers can charge per unit of electricity or gas.
The energy price cap explained
Energy bills may have stabilised since the 2021 UK energy crisis, but changes to the energy price cap still dominates the news every three months as millions of households find out how much they’ll be paying for gas and electricity this quarter.
All that news coverage doesn’t make the energy price cap any less confusing. How is it set, where does it come from – and why is it given as annual total when your bills are still based on how much energy you use?
We’ve answered all these questions and more below, so you can get to grips with what the energy price cap means for you.
What is the energy price cap?
The energy price cap is an upper limit placed on how much energy suppliers can charge for gas and electricity.
Ofgem reviews the energy price cap every three months, announcing the new price a little over a month in advance. For example, the January price cap is announced in late November.
The price cap applies to all customers on standard variable tariffs. These are the default tariffs you’re placed on when your existing contract expires or when you move into a new home without choosing a new energy tariff.
Is the energy price cap an annual limit?
The energy price cap is often expressed as an annual total. This is why you’ll see headlines like ‘New price cap sets energy bills to £1,700 a year’.
However, the price cap is not actually an annual maximum. Instead, the cap sets an annual cost based on the average usage of a typical household. Energy suppliers set unit costs and daily standing charges based on this total, which vary slightly between suppliers and areas. Your actual bill will be based on these rates and the amount of energy your household uses.
When we give unit rates and standing charges on our site, we use the average for customers across England, Scotland and Wales who pay by direct debit.
What is the current energy price cap?
The price cap is adjusted every three months, and was last updated in January 2025:
| Â | January Energy Price Cap 1 January to 31 March 2025 |
Previous Energy Price Cap 1 October to 31 December 2024 |
| Gas | Unit rates: 6.34p /kWh Standing charge: 31.65p /day |
Unit rates: 6.24p /kWh Standing charge: 31.66p /day |
| Electricity | Unit rates: 24.86p /kWh Standing charge: 60.97p /day |
Unit rates: 24.50p /kWh Standing charge: 60.99p /day |
Figures are rounded to two decimal places and are based on the average for customers in England, Scotland, and Wales who are paying by direct debit. Prices may vary by region and include VAT. Unit prices are given in pence per kilowatt hour.
Why has electricity become more expensive since 2021?
In 2021, the UK experienced an energy crisis that is still affecting bills today.
A combination of factors including the UK leaving the European Union (Brexit), low renewable energy production, damage to global energy infrastructure and the Russia-Ukraine war all drove wholesale energy costs to unprecedented highs.
These costs were then partly passed on to consumers, with the UK government intervening to subsidise some of the cost of domestic energy during the height of the crisis.
This government support has now ended, and while energy bills for UK customers have stabilised prices are still significantly higher than before 2021.
How has the price cap changed over time?
Ofgem reviews the energy price cap every three months and adjusts the value based on current costs to suppliers.
The energy price cap almost quadrupled between 2021 and 2023 as wholesale energy prices skyrocketed. Since the peak in early 2023 energy prices have fallen and stabilised. Over the last 12 months, we’ve seen the price cap undergo much smaller adjustments each quarter.
Current projections are for the price cap to remain relatively stable, with the small adjustments throughout the year trending generally upwards.
When is the price cap adjusted?
The price cap is adjusted on the 1st of January, April, July and October each year. Ofgem usually confirms what the new price cap just over a month before the change.
Will energy bills go down in 2025?
While energy bills fell by 7% in the July 2024 price cap update, they rose by around 10% in October 2024 and by 1.7% in January 2025.
Predictions are for the price cap to stay relatively stable for the rest of 2025, with 1-2% increases and decreases each quarter. However, global energy prices have stayed volatile, and the further in the future predictions get the less likely they are to be accurate.
Are there any good deals available?
Switching to a good value fixed rate tariff can both help keep your bills lower and offer more peace of mind.
Our current top recommendation is a fixed-rate tariff from Octopus Energy. Not only does Octopus have fixed-rate tariffs available that are cheaper than the current energy price cap (at time of publication), it’s also consumer advice service Which?’s top recommended supplier, and has been for the last 7 consecutive years.
If you’re looking to save money over the long-term, there’s also support available to help make your home more energy efficient.
Are there deals cheaper than the price cap?
Yes. You can pay less than the energy price cap by switching to a cheaper fixed-rate tariff. During the UK energy crisis, there were no fixed-rate tariffs available for less than the price cap. However, as the energy market has recovered, suppliers have begun to reintroduce these better priced options.
Unsure about switching to a fixed-rate tariff?
If you’re concerned about increases to the energy price cap, switching to a fixed-rate tariff can offer peace of mind as well as saving you money. Book a free call with our team of Connections Experts to find out more and get switched over in just a few minutes.
What we love about Octopus
Boasting more awards than any other energy supplier, exceptional customer service and an all-green electricity mix, there’s no question Octopus is our top pick for home energy supply.
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