Your questions answered: Energy price caps

Mae’r dudalen yma ar gael yn Gymraeg.

What are energy price caps?

What are energy price caps and how will they benefit me?

Energy price caps make sure you pay a fairer price for your energy. They limit how much suppliers can charge you per unit of energy. They are based on the costs that Ofgem – Great Britain’s energy regulator – calculates suppliers need to spend to get energy to your home.

This limit isn’t on your total bill, which will vary depending on how many units of energy you use in a billing period.

It doesn’t matter which supplier you are with – your supplier must apply the caps. You’re price protected if you use a prepayment meteropen key term pop-up, get the government’s Warm Home Discount and/or are on a 'standard variable'open key term pop-up energy tariff or a tariff you haven’t chosen (a 'default' tariffopen key term pop-up).

If you are on a fixed-term energy tariffopen key term pop-up you have chosen, your prices will not be protected by the caps. These tariffs are more likely to be good value.

Price differences between default and standard variable tariffs and fixed tariffs have widened, suggesting suppliers can offer low-price fixed tariffs to attract active consumers and cover direct costs, but rely on the higher prices charged to less active customers to cover their operating costs and maintain profits.

Price caps ensure consumers who prepay or who are on poor value ‘default’ energy deals pay a fairer price for their energy, and are protected from being overcharged. If costs to supply energy fall, the caps make sure suppliers pass on savings. If costs rise, then you can have peace of mind that the caps ensure price rises are justified and you cannot be overcharged.

What is my energy tariff?

Tariffs are what energy suppliers charge you for gas and electricity. If you don't know what your energy tariff is, contact your energy supplier or check your last energy bill. 

You can find your supplier's contact details on your gas or electricity bill. If you don’t know who your supplier is, see Who is my gas or electricity supplier?

You should talk to your supplier or look at their website to see what tariffs they have available and if you can pay less. You can also use a price comparison website to see if another supplier can offer you a better tariff. A list of Ofgem approved online comparison services are available at Ofgem Confidence Code.

What is the prepayment tariff price cap?

You are protected by a ‘prepayment’ price cap (sometimes called a ‘safeguard tariff’) if you use a prepayment meteropen key term pop-up to pay for your energy. This cap lasts until 2020.

Before the default tariff cap started on 1 January 2019,  people who got the government’s Warm Home Discount and were on a default tariff (including standard variable tariffs) were protected by the Prepayment Price Cap.

If you have chosen to be on a fixed-term energy tariffopen key term pop-up, your prices will not be protected by the cap. These tariffs are more likely to be good value.

Energy price caps limit how much suppliers can charge you per unit of gas or electricity. They are based on how much it really costs, on average, to get energy to your home. They will ensure you pay a fairer price for your energy and are protected from being overcharged by energy suppliers.

Your supplier can tell you if your energy tariffopen key term pop-up is covered by a price cap. They must also write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. Check your gas or electricity bill for your supplier’s contact details. If you don’t know who your supplier is see Find my supplier.

What is the default tariff price cap?

You are protected by a ‘default tariff’ price cap if you are on a 'standard variable'open key term pop-up energy tariff or a tariff you haven’t chosen (a 'default' tariffopen key term pop-up). This cap started on 1 January 2019.

Before the default tariff cap started on 1 January 2019, people who got the Government’s Warm Home Discount and were on a default tariff (including standard variable tariffs) were protected by the prepayment price cap.

If you have chosen to be on a fixed-term energy tariffopen key term pop-up, your prices will not be protected by the cap. These tariffs are more likely to be good value.

Energy price caps limit how much suppliers can charge you per unit of gas or electricity. They are based on how much it really costs, on average, to get energy to your home. They will ensure you pay a fairer price for your energy and are protected from being overcharged by energy suppliers.

Your supplier can tell you if your energy tariffopen key term pop-up is covered by a price cap. They must also write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. Check your gas or electricity bill for your supplier’s contact details. If you don’t know who your supplier is see find my supplier.

What are the benefits for me?

Energy price caps ensure you pay a fairer price for your energy and are protected from being overcharged.

If costs to supply energy fall, the caps make sure suppliers pass on savings. If costs rise, then you can have peace of mind that the caps ensure price rises are justified and you cannot be overcharged.

Will my bills fall under the price caps?

Yes, if you’re on a poor value deal. Suppliers must cut their prices to the level or below the caps we set.  So if you’re on one of the tariffs currently priced above the cap, you will save money. 

If costs fall, the caps make sure suppliers pass on savings. Equally, if costs rise then you can have peace of mind that the cap ensures that any price rise is justified based on what it costs to get energy to you.

They won’t limit your total energy bill. This will vary depending on how much energy you use. 

Do price caps limit my total energy bill?

No. Price caps don’t limit your total bill. This will vary depending on how much energy you use.  For example, you might you use more energy in winter so your bill will be bigger.

Will my energy bill explain how a price cap has been applied?

We expect suppliers will advise affected customers. They will explain how they will do this.

Your supplier must always write to tell you if your energy tariffopen key term pop-up is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. They must tell you what’s changing and why, when the changes will apply, your rights and options, and what will happen if you take no action.  

If you aren’t sure and want to check, contact your supplier to see if your tariff prices are protected and for information on the capped price you will be charged. You can view the levels of the caps we set here.

Your capped tariff under a price cap will depend on many things: how you pay (direct debit or standard creditopen key term pop-up), where you live and what type of meter you have. There are regional differences in the caps to reflect how much it costs to transport energy across the energy network to where you live. 

You can find your supplier’s contact details on a recent bill, or see find my supplier.

Will I still be sent energy bills if I’m protected? Will anything else change in how my supplier communicates with me?

Yes, you will still receive your energy bills as you do now. We expect suppliers will advise customers who are affected by the price caps. They will explain how they will do this.

Your supplier must always write to tell you if your energy tariffopen key term pop-up is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. They must tell you what’s changing and why, when the changes will apply, your rights and options, and what will happen if you take no action.  

If you aren’t sure and want to check, contact your supplier to see if your tariff prices are protected, for information on the capped price you will be charged and to find out about the communication preferences you have with them as a customer.

You can find your supplier’s contact details on a recent bill, or see find my supplier.

How long will price caps last?

The prepayment price cap (sometimes called a ‘safeguard' tariff) is expected to last until 2020, and the default tariff cap to 2023. By then we expect other reforms, like faster switching times and smart meters, alongside other advances in the energy industry, to bring about easier and fairer access to better deals. 

As the regulator, we monitor the market closely to make sure it’s competitive, and will report to the government. We’ll update the caps twice a year to make sure prices reflect the changes in underlying costs to get energy to you, and keep a close eye on your energy supplier and the energy market more generally to make sure you are getting a fair deal at all times.

Based on our reports, it will be up to the government to consider if the market is working well enough for the caps to be removed.

Will the price caps change? How will I know?

Every six months we work out how much it costs a supplier, on average, to get energy to you. We then revise the cap levels to reflect this to ensure you pay a fair price, and to protect against overcharging.

Ofgem will always explain why we make changes to the caps and publish the levels we set on our our website. You can also subscribe to our Alerts & Briefings e-newsletter to be notified each time we update the price caps: Sign up here.

You don’t need to do anything to be price protected – your supplier must apply the caps.

Your supplier can tell you if your energy tariffopen key term pop-up is covered by a price cap. Contact them for details specific to your tariff. They must also write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available.

Even if you are covered by a price cap, you should still shop around to see if you can save by switching to a different tariff or supplier. It is likely there will be offers which could save you even more money on your gas and electricity than staying on an energy contract covered by the price caps.

You can find your supplier’s contact details on a gas or electricity bill. If you don’t know who your supplier is, see find my supplier.

How will price cap effectiveness be monitored?

Ofgem, as the energy regulator, monitors the market closely to make sure it’s competitive, and reports to the government. We’ll update the caps twice a year to ensure prices are fair, and keep a close eye on your energy supplier and the energy market more generally to make sure you are getting a fair deal at all times.

Based on our reports, it will be up to the government to consider if the market is working well enough for the caps to be removed.

Could price caps mean suppliers raise the prices of their other tariffs?

It’s possible that some suppliers may raise the price of their other tariffs. We still expect there to be plenty of competitively price deals available on the market.

We advise all consumers, even those protected by the price caps, to shop around for a better deal and save even more money. It is likely there will be offers which could save you even more money on your gas and electricity than staying on an energy contract covered by the price caps.

Find advice on how to shop and the switching process here

How can I check my supplier is charging me correctly under the cap? What do I do if I have doubts?

Ofgem decides what the caps are going to be, and revises them twice a year. We’ll always explain why we make changes and publish the levels suppliers must follow on our our website. Your supplier can give you the details for your specific tariff.

Your capped tariff will depend on many things: how you pay (direct debit or standard creditopen key term pop-up), where you live and what type of meter you have. Price caps won’t limit your total bill. This will vary depending on how much energy you use.

If you have doubts or questions, contact your supplier in the first instance. They can provide you with information specific to your tariff.

You can find your supplier’s contact details on a gas or electricity bill. If you don’t know who your supplier is see find my supplier.

If you aren’t satisfied with their response and want to complain, follow these complaints steps

If I move home, will I still be protected?

When you move home, the current energy supplier for the property will normally automatically put you on a ‘deemed contract’ from the day you are first responsible for the property. Deemed contracts ensure a property continues to have power, even where the occupiers may change.

These contracts tend to be a supplier’s basic ‘standard variable’ or ‘default’ tariff offer. If the tariff is a ‘standard variable’ or ‘default’ tariff, you will be protected by the default tariff price cap. Equally, if the property is set up on a prepayment meter basis you will be protected by the prepayment meter price cap.

As soon as you move in, we recommend you contact the current energy supplier of the property to find out which tariff you are on and then talk to them or use a price comparison website to make sure you are saving as much money as you can. It is likely there will be offers which could save you even more money on your gas and electricity than staying on an energy tariff covered by the price caps. If you aren’t sure who the supplier is see find my supplier.

Find advice on how to shop and the switching process.

Who energy price caps apply to

How will I know if price caps apply to me?

We expect suppliers will advise affected customers. Your supplier must always write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. They must tell you what’s changing and why, when the changes will apply, your rights and options, and what will happen if you take no action.  

If you aren’t sure and want to check, contact your supplier to see if your tariff prices are protected and to check the price you will be charged.

You can view the levels of the caps we set here. Your supplier can give you the details for your specific tariff.

Your capped tariff will depend on many things: your tariff, where you live, and what type of meter you have.

I get other benefits. Am I still eligible?

Yes. Price caps are designed to work alongside protections and schemes like the Warm Home Discount, the Priority Services Register, cold weather and winter fuel payments, and various other schemes that help you save energy and keep your homes warm.

Find out more about energy support schemes in our Information leaflet: How to save money and use less energy.  

I get the Warm Home Discount. How am I affected?

If you get the Government’s Warm Home Discount (WHD) and pay for your gas or electricity using a prepayment meter, then your energy prices are protected by the prepayment meter price cap. If you get the WHD and are on a 'standard variable' energy tariff or a tariff you haven’t chosen (a 'default' tariff ) your energy prices are protected by the default tariff cap.

Find out more at Energy price caps and the Warm Home Discount.

Am I protected if I have an Economy 7 or 10 tariff?

Yes, you will be protected if you are on a standard variable or default tariffopen key term pop-up. We expect suppliers will advise customers affected by the price caps. They will explain how they will do this.

Your supplier must always write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available. They must tell you what’s changing and why, when the changes will apply, your rights and options, and what will happen if you take no action.  

If you aren’t sure and want to check, contact your supplier to see if your tariff prices are protected and for information on the capped price you will be charged. You can find your supplier’s contact details on a recent bill, or see find my supplier.

I think I am eligible but my supplier says I’m not. What can I do?

In the first instance, you should ask your supplier to explain why. If you’re not happy with their response, follow these complaints steps.

After eight weeks, if you’ve not resolved the issue you can take your case further and complain to the Energy Ombudsman who are independent and impartial. Our complaints steps explain how this works.

I am not covered by a price cap but want to be. Can I switch to a ‘default’ deal to ensure I am protected?

No. Standard variable tariffs and default deals are generally poor value and more expensive, which is why price caps are in place. We advise all consumers, even those protected by the price caps, to still shop around to see if you can save by switching to a different tariff or supplier. It is likely there will be offers which could save you even more money on your gas and electricity than staying on an energy tariff covered by the price caps.

More than half of consumers have never switched supplier or have switched only once, and are on more expensive default tariffs as a result.

We’re making the switching process faster and more reliable too, with switching guarantees and compensation if your switch doesn’t run as you’d expect.

Find advice on how to shop and the switching process here

How price caps are calculated

How are price caps calculated?

We calculate them based on the latest estimates of the costs for each supplier to supply their customers with electricity and gas. These include the costs of wholesale energy, networks, environmental and social programme and tax. We also make an allowance for suppliers’ costs and a fair level of profit to ensure they can continue to operate. Ofgem will always explain why we make changes to the caps, and you can see the current levels we have set on our our website

Your supplier can tell you if your energy tariff is covered by a price cap and give you specific details. They must also write to tell you if your tariff is changed in a way that could disadvantage you, or if the tariff you are on is no longer available.

Check your gas or electricity bill for your supplier’s contact details. If you don’t know who your supplier is see find my supplier.

Will where I live affect the level a price cap is set at?

There are regional differences in the cap levels to reflect how much it costs to transport energy across the energy network to the region you live in. These network charges vary.

Is the prepayment price cap calculated differently to the default tariff price cap?

No.

We have designed the methodology to calculate the level of the ‘default tariff’ price cap to the requirements of the Government’s Domestic Gas and Electricity (Tariff Cap) Act 2018. This applies to all ‘standard variable’ and ‘default’ tariff customers on standard credit, rather than prepayment, meters. The Act created a new duty for Ofgem to design and implement the default tariff price cap.

We calculate the level of the prepayment price cap following the Competition and Markets Authority’s (CMA) methodology. In July 2019, the CMA revised their methodology, designed in 2015, to better reflect the costs incurred to serve prepayment customers. The costs of serving prepayment customers include additional costs such as operating pre-pay keys and cards used to top up pre-payment meters. From 1 October 2019, the prepayment meter price cap methodology aligns with our methodology for the default tariff price cap.

How can I find out if the price cap will save me money, and by how much?

You can see the current levels of the default tariff caps on our price cap data page

If you’re on one of the tariffs currently priced above the cap, you will save money. Your capped tariff will depend on many things: your tariff, where you live and what type of meter you have. Price caps won’t limit your total bill though – this will vary depending on how much energy you use. 

If you have questions, speak to your supplier. They can provide you with details specific to your tariff. Check your gas or electricity bill for your supplier’s contact details. If you don’t know who your supplier is, see find my supplier.

Price caps and your data

How will suppliers use my data to determine if I should get price protection?

Your data is your data. Your energy supplier must ensure it is handled according to the permissions you have given to them and in accordance with the law. They are also responsible for ensuring your energy tariff is capped to the level or below the price caps Ofgem sets. If you have questions about how your supplier does this and uses your data, you should contact them.

You can find your supplier’s contact details on a gas or electricity bill. If you don’t know who your supplier is see find my supplier.

 If I am protected by a price cap, can my supplier use my data for marketing purposes?

Unless you give your supplier permission to use your data for marketing, they cannot use it for this purpose.

If you have questions about how your supplier uses your data, contact your supplier. You can find your supplier’s contact details on a gas or electricity bill. If you don’t know who your supplier is see find my supplier.

Is my data stored and used differently as a result of price caps?

Your energy supplier is responsible for ensuring that any personal information and data that they hold about you is handled in accordance with data protection law and the permissions you have given to them. If you have questions about this, contact your supplier.

You can find your supplier’s contact details on a gas or electricity bill. If you don’t know who your supplier is, see find my supplier. If you aren’t satisfied with their response and want to complain, follow these complaints steps

Other energy help and support

Can I still reduce the price I pay for gas and electricity?

Even with price caps in place, we recommend that you talk to your supplier or use a price comparison website to make sure you are saving as much money as you can. It is likely there will be offers which could save you even more money on your gas and electricity than staying on an energy ctariff covered by the price caps.

Where possible, switch to a fixed tariff to cut your bill prices further – saving money on your bill could also make it more affordable to repay a debt if you have one.

Find advice on how to shop and the switching process here

What other energy advice and support is available?

There are a number of support schemes and advice service available to you. Read our information leaflet to find out more: How to save money and use less energy

Find out about Ofgem and the UK government’s role in price caps.

Prepay or prepayment meter

A prepayment meter tariff means you pay upfront for your gas or electricity use. You can ‘top up’ using an app on your phone, by text or through a token or key card at a shop. More.

Standard variable tariff

A basic tariff with variable prices that can go up and down with the market. You could be put on a standard variable tariff or a tariff you have not chosen (a ‘default tariff’) if your fixed-term tariff contract ends and you have not chosen a new one. They usually cost more than a fixed-term tariff. More.

Default tariff

If you’ve never switched energy supplier or have switched only once, you’re likely to be on a poor value, more expensive ‘default’ tariff. Default tariffs, including standard variable tariffs, are a basic tariff from an energy supplier. More.

Fixed-term tariff

A tariff with specific terms applying to the contract conditions. Usually these lock-in a price for a year or more, amongst other services. More.

Prepay or prepayment meter

A prepayment meter tariff means you pay upfront for your gas or electricity use. You can ‘top up’ using an app on your phone, by text or through a token or key card at a shop. More.

Fixed-term tariff

A tariff with specific terms applying to the contract conditions. Usually these lock-in a price for a year or more, amongst other services. More.

Energy tariff

Tariffs are what energy suppliers charge you for gas and electricity. More.

Standard variable tariff

A basic tariff with variable prices that can go up and down with the market. You could be put on a standard variable tariff or a tariff you have not chosen (a ‘default tariff’) if your fixed-term tariff contract ends and you have not chosen a new one. They usually cost more than a fixed-term tariff. More.

Default tariff

If you’ve never switched energy supplier or have switched only once, you’re likely to be on a poor value, more expensive ‘default’ tariff. Default tariffs, including standard variable tariffs, are a basic tariff from an energy supplier. More.

Fixed-term tariff

A tariff with specific terms applying to the contract conditions. Usually these lock-in a price for a year or more, amongst other services. More.

Energy tariff

Tariffs are what energy suppliers charge you for gas and electricity. More.

Energy tariff

Tariffs are what energy suppliers charge you for gas and electricity. More.

Standard credit

When you arrange payment on receipt of a bill (e.g. each month or once a quarter), rather than paying automatically by Direct Debit or prepayment. More.

Energy tariff

Tariffs are what energy suppliers charge you for gas and electricity. More.

Energy tariff

Tariffs are what energy suppliers charge you for gas and electricity. More.

Standard credit

When you arrange payment on receipt of a bill (e.g. each month or once a quarter), rather than paying automatically by Direct Debit or prepayment. More.

Default tariff

If you’ve never switched energy supplier or have switched only once, you’re likely to be on a poor value, more expensive ‘default’ tariff. Default tariffs, including standard variable tariffs, are a basic tariff from an energy supplier. More.