Energy price cap explained: latest Ofgem rates, predictions and whether prices are going down
What is the energy price cap?
The energy price cap is a limit on the unit rates and standing charges that energy suppliers can charge for their "default" or standard variable tariffs. The cap is set by Ofgem, the energy regulator, and is reviewed four times a year. There is also a version of the price cap that applies to customers on prepayment meters.
April 2026 energy price cap rates and what they mean for your bills
Ofgem has announced that the April 2026 price cap is set at £1,641, largely thanks to an average of £150 being taken off bills as part of the government's autumn budget. This price cap will be in effect from 1 April to 30 June 2026.
The £150 reduction is being achieved by removing the Energy Company Obligation and Renewables Obligation green levies from customers' bills. These payments are baked into unit rate costs for gas and electricity, meaning these will come down. It also means that customers will benefit from the reductions differently depending on how much energy they use. The higher the usage, the more they could save and vice versa.
For the price cap that runs from 1 April to 30 June 2026, the average unit rates and standing charges are:
| Electricity | Gas | |
|---|---|---|
| Unit rates | 24.67p per kWh | 5.74p per kWh |
| Standing charge | 57.21p per day | 29.09p per day |
The cap only applies to the unit rates of standard variable tariffs. These tariffs are typically the most expensive that suppliers offer. If you haven't switched energy before, or you've rolled off a fixed energy tariff, you're likely to be on one of these tariffs.
It's important to remember that the cap is based on unit rates - that's the actual price that is changing - but in order to more clearly and easily report it, the "cap level" (currently £1,641) is based on the annual usage of an average use dual fuel customer paying by direct debit. This means that you could actually pay more than the cap amount if you live in a bigger house and/or use more energy.
Energy price cap predictions and forecasts
Compared to the peak of the energy crisis in 2022 and early 2023, prices have come down considerably. However, they remain well above pre-crisis levels, which were typically around £1,000 per year for an average home. Prices had been gradually stabilising since mid-2023, but the war in the Middle East has caused wholesale energy prices to spike, which will have a knock-on effect for UK energy bills.
The next price cap, due to be announced on 27 May and come into effect in July, is almost certain to increase, with current estimates putting it at 13% above £1,641. This would put it in the region of £1,850 per year.
The table below shows where the price cap level could go in the future - it's currently likely to increase further.
| Price cap period | Annual energy cost for an average usage medium-sized household paying by Direct Debit |
|---|---|
| 1 October to 31 December 2025 | £1,755 |
| 1 January to 31 March 2026 | £1,758 |
| 1 April to 30 June 2026 | £1,641 |
| 1 July to 30 September 2026 (average of British Gas, EDF and E.ON Next's current predictions) | £1,849 |
| 1 October to 31 December 2026 (average of British Gas, EDF and E.ON Next's current predictions) | £1,932 |
What to do about rising energy prices
If you are on a standard variable tariff, you are automatically protected by the energy price cap - but that doesn't necessarily mean you're on the best deal available.
There are a couple of options worth considering:
- Switch to a fixed rate tariff: These lock in your unit rate for a set period, typically 12 or 24 months, giving you certainty regardless of future cap changes. You can compare fixed energy deals to see whether one makes sense for your household.
- Switch to a tracker tariff: These follow wholesale prices directly. They can be cheaper than the cap when wholesale prices fall, but carry more risk if prices rise. Some tracker tariffs come with a built-in discount against the price cap, which can be a better option if you want to guarantee you'll always pay less than the cap.
If you're interested in potentially switching, you can compare energy prices and see if there are any deals that are right for you by clicking below.
Run an energy comparison
Click here to compare energy prices and get started on your energy switch.
For the most accurate long-term view of your costs and savings, you can also compare deals with predicted July changes already factored in - you can't do this anywhere else.
"With eight in 10 households worried about their energy bills rising, households have a real opportunity to protect themselves by locking in a fixed deal for 12 months or more that gives them certainty on the price they’ll pay, especially over the coldest months.
“While the price of fixed deals has increased, it’s a reasonable move to pay a little more to protect your rates for at least a year in the current circumstances."
Energy prices by region and why they vary
Although the energy price cap sets a national framework, the unit rates and standing charges you actually pay can vary depending on where you live. Rural areas generally pay more than predominantly urban ones because the cost of transporting power to remote places is greater than transporting it throughout more populated areas. Those costs are passed on through regional distribution charges.
For instance, customers in the North Wales and Mersey region tend to pay more for their electricity than customers in London. Your supplier applies the regionally adjusted rates that apply to your area, all of which must still fall within the Ofgem cap limits.
Our guide to regional energy prices includes specific unit rates and standing charges for your location.
How the energy price cap is calculated
Ofgem builds the Ofgem price cap from several distinct cost components, each reflecting a real cost suppliers incur in delivering energy to your home.
The main elements are:
- Wholesale energy costs: The price suppliers pay to buy gas and electricity on the open market. This is by far the largest component and drives most of the cap's movement.
- Network costs: The charges for transporting energy through the national grid and local distribution networks to your property.
- Policy costs: Levies that fund government energy schemes, such as support for renewable energy development and the Warm Home Discount.
- Supplier operating costs and profit margins: A regulated allowance for suppliers to cover their running costs and earn a reasonable return.
- VAT: Applied at 5% on domestic energy bills.
Ofgem calculates the wholesale element using an assessment period - a defined window during which it tracks market prices - and then adds the other components to arrive at the final cap figure. Because wholesale costs make up roughly 40-50% of the total, movements in global gas markets have an outsized effect on where the cap lands each quarter.
When are the energy price cap assessment periods?
Ofgem looks at wholesale prices over set periods before each price cap reset.
The assessment period for the upcoming price caps are as follows:
| Price cap period | Announcement date | Price cap assessment period |
|---|---|---|
| 1 April - 30 June 2026 | 25 February 2026 | 18 November 2025 - 17 February 2026 |
| 1 July - 30 September 2026 | TBC - but by 27 May 2026 | 18 February - 18 May 2026 |
April 2026 prepayment meter price cap rates
The price cap affects the four million prepayment customers in the UK in the same way that it affects those on standard variable tariffs. There is a separate cap for prepayment tariffs, which is reviewed independently of the SVT cap by Ofgem.
The current prepayment price cap level is £1,597.
For the April to June 2026 price cap, the prepayment unit rates and standing charges are:
| Electricity | Gas | |
|---|---|---|
| Unit rates | 23.93p per kWh | 5.53p per kWh |
| Standing charge | 57.21p per day | 29.09p per day |
Why is the energy price cap controversial?
There are a few reasons why the energy price cap has come under fire from energy experts:
- Significant knock-on costs to customers. Since the increase of energy prices in September 2021, the cap has been criticised by suppliers for not allowing them to charge more for standard variable tariffs. This means costs are passed on to customers in one hit when the cap level rises. This is why the cap is now reviewed four times a year, with Ofgem hoping that any wholesale cost savings can be more quickly passed on to customers.
- Better savings can (usually) be found by switching. This was the case but isn't necessarily true anymore given the wholesale energy market situation.
- False sense of security. The cap can still go up (or down) as energy prices will always be subject to wholesale costs, distribution costs and other factors. The concern is that consumers will assume the price cap means they are protected from fluctuating costs by the government’s cap.
How has the price cap level changed over time?
Government help with energy bills
There are no widespread government support measures currently available. This is probably because, although the May price cap will be an increase, energy use will go down during the summer months, so the effect won't be felt as much. As we go into autumn, though, some targeted government support for the most vulnerable households may be available because energy usage will start rising again. In the meantime, there is financial help from the Household Support Fund (via local councils) and from various charities and organisations, both nationally and locally.
You can also check to see if you can get the Warm Home Discount, Winter Fuel Payment and/or Cold Weather Payment, which are paid every year to eligible households.
How to reduce your energy bills
Regardless of where the cap sits, reducing the amount of energy you use is the most reliable way to lower your bills. Practical steps that can make a meaningful difference include:
- Improve insulation: Loft and cavity wall insulation can significantly reduce heat loss.
- Get a smart meter: A smart meter sends readings automatically to your supplier, eliminating estimated bills, and the in-home display shows in near real-time what your energy is costing.
- Adjust your heating habits: Turning your thermostat down by 1°C can typically reduce your heating bill by around £90 per year, according to the Energy Saving Trust.
- Switch to LED lighting: LED bulbs use up to 90% less energy than traditional incandescent bulbs and last much longer.
- Use appliances efficiently: Running your washing machine at 30°C, using the dishwasher only when full, and avoiding standby mode all add up over a year.
Even small changes can reduce a typical household's energy consumption by 10-20%, which at current cap rates could represent an estimated saving of £150-£350 per year - a useful contribution to any household energy bill forecast.
FAQs
Will the price cap be displayed on my energy bill?
There may be information about the price cap on your energy bill, but its level won't be factored into any calculations or information about your charges.
What will happen to the energy price cap in 2026?
The energy price cap rose to £1,758 in January 2026 but has come down to £1,641 in April. Its next update is due to be announced by 27 May.
Is there a business energy price cap?
There’s no price cap on business energy. If you have a non-domestic energy contract, the price cap will not protect your bills. The only way to guarantee bill stability is to fix your rates. If your contract is up for renewal or if it’s already ended, head to our business energy page to compare quotes from a panel of suppliers and switch.
Are any suppliers exempt from the price cap?
Ofgem reserves the right to grant temporary or permanent exemptions from the price cap for tariffs and suppliers which make significant efforts to generate and supply green energy to customers. This means that they are allowed to charge rates that exceed the price cap unit rate on SVTs - in other words, the price cap does not apply to them.
Ecotricity, Good Energy and 100Green are the three suppliers who have been granted permanent exemption from the price cap.