Levels of the energy price caps

Mae’r dudalen yma ar gael yn Gymraeg.

Here you can view the price cap levels we have set for suppliers to apply to prepaymentopen key term pop-up and default energy tariffs, including standard variable (SVT)open key term pop-up energy tariffs. Your energy bill isn’t capped – this will vary depending on how much energy you use. The caps apply to the price your supplier charges for each unit (kWh) of electricity and gas used, and your standing charge. 

It's best to contact your supplier for your specific tariff price details. You can find their contact details on a recent bill, or see find my supplier.

If suppliers raise their prices, they must write to inform you before a new price applies, and ensure you have enough time to consider your options and switch away if you want to. 

Current price cap levels

Prepayment meter price cap: 1 April 2019 to 30 September 2019

Default tariff cap level: 1 April 2019 to 30 September 2019

Next price cap levels

Prepayment meter price cap: 1 October 2019 to 31 March 2020

Default tariff cap level: 1 October 2019 to 31 March 2020

We update the caps twice a year in February and August, to reflect the price cap levels that will come into effect in April and October. You can subscribe to our Alerts & Briefings e-newsletter to be notified each time we update the price caps: Sign up here.

How are capped tariffs calculated?

Click a chart to view the different cost factors behind the set cap levels. The charts show an indicative example of a cap level for a customer using a typical amount of energy. 

Chart

Javascript is required to render chart Breakdown of the prepayment price cap (GBP £).

Source: Ofgem analysis.

Information correct as of: February 2019

This chart shows a breakdown of the costs that make up the prepayment meter price cap. It helps to explain the relationship between the level of the prepayment price cap we set, and the different cost factors that influence it each time we update it. We update this chart in February and August, to reflect the levels of the prepayment price cap that will come into effect in April and October.

The prepayment price cap limits how much a supplier can charge customers on prepayment meters per unit of energy. It doesn’t cap the total cost of a bill. That’s because the amount customers pay also depends on how much gas or electricity they’ve used. Suppliers can charge less than the set level of the cap, but not more. All prices shown here are for a dual fuel customer with typical energy use.

We extended the prepayment price cap to a further one million vulnerable customers in receipt of the government’s Warm Home Discount who were on a standard variable or default energy tariff on 2 February 2018 (under the label of a ‘safeguard tariff’). These customers transferred to the broader price cap for customers on default energy tariffs when it became effective on 1 January 2019.

Click the ‘more information’ tab above for a summary of the latest trends, details of how to interpret the component costs and allowances, and for information on our methodology.

For a detailed breakdown of the cap by meter type and region, please see our page for the latest level for 1 April to 30 September 2019.

Policy Areas:

  • Electricity - retail markets
  • Gas - retail markets

Data Table

Breakdown of the prepayment price cap (GBP £)
Wholesale costsNetwork costsPolicy costsOther, indirect cost allowancePrepayment uplift allowanceHeadroom allowanceVAT
2017 summer361257125166642850
2017/18 winter352258112168652749
2018 summer378258135171662952
2018/19 winter421257134172673154
2019 summer493271144174673459

More information

At-a-glance summary

  • We update the level of the prepayment price cap on 1 April and 1 October each year. The update on 1 April 2019 will increase the set level by £106 from its previous level at 1 October 2018.
  • The rise in the tariff level reflects increases in wholesale, network, and policy costs.
  • Other categories of costs remained largely unchanged. These categories are the costs to comply with social and environmental government schemes, network costs, operating costs, costs specifically associated with prepayment meters and ‘headroom’, which is designed to allow suppliers to offer competitive deals underneath the cap.

Relevance and further information

This chart summarises the different costs that make up the prepayment meter price cap applying to customers with prepayment meters (excluding those with fully interoperable smart meters). 

The Competition and Markets Authority introduced the price protection of a price cap to prepayment meter customers, who can’t easily access the cheapest tariffs, in April 2017. These customers are often in vulnerable circumstances. They designed the tariff based on a broad estimate of how much it costs an efficient supplier to provide gas and/or electricity to certain groups of customers. 

As the energy regulator, Ofgem administers and calculates the level for the cap.

We update the level of the tariff every six months, either reflecting changes in underlying costs, or increases in inflation. Our calculations cover:

  • wholesale energy costs: how much a supplier has to pay to get the gas and electricity to supply households with energy (we base this on forward prices for energy to be delivered over a 12-month period);
  • network costs: the regional costs of building, maintaining and operating the pipes and wires that carry energy across the country to households;
  • policy costs: the costs related to government social and environmental schemes to save energy, reduce emissions and encourage take-up of renewable energy;
  • other, indirect cost allowance: this includes operating costs and is inflated by the Consumer Price Index
  • prepayment uplift allowance: the additional costs involved in supplying prepayment customers compared to credit customers, which is inflated by CPI; and
  • headroom allowance: this allows suppliers to offer competitive deals underneath the set level of the prepayment price cap, and is calculated as a proportion of other cost elements.

Methodology

  • The level of the cap is based on calculations of wholesale costs, network costs, policy costs, operating costs and costs specifically associated with prepayment meters. It also includes a degree of ‘headroom’, which is designed to allow suppliers to offer competitive deals underneath the level we set for the prepayment price cap.
  • We calculate the bill values associated with the different tariff types using a ‘typical domestic consumer’ with ‘medium’ energy use. At October 2017, typical consumption values for a medium consumer are 12,000kWh/year for gas and 3,100kWh/year for electricity (profile class 1). Find out more at Typical domestic consumption values.
  • All prices shown are for a dual fuel customer (i.e. where a customer takes gas and electricity from the same supplier). 
  • Further details of the methodology for calculating the level of the prepayment price cap can be found in the CMA Order and Explanatory Note
  • The figures presented here are calculated differently from the data on the domestic dual fuel bill breakdown over time for the large suppliers. This data is from the historical financial reporting by the large suppliers. The figures used to calculate the prepayment price cap are estimates across the whole market, and we make certain assumptions. For example, we calculate wholesale prices based on the forward prices for energy delivered over a 12-month period, but individual suppliers may differ in their purchasing strategies – some suppliers buying wholesale energy as much as two to three years in advance and some nearer the time that they launch their products.
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Chart

Javascript is required to render chart Breakdown of the default tariff price cap (GBP £).

Source: Ofgem.

Information correct as of: 7 February 2019

This chart shows a breakdown of the costs that make up the default tariff price cap for a dual-fuel, direct debit customer with typical consumption. It helps to explain the relationship between the level of the cap we set, and the different cost factors that influence it each time we update it.

The default tariff cap is effective from 1 January 2019. It has different levels set to reflect how you pay, where you live and the type of energy meter you have. For a detailed breakdown of the set cap prices by payment method, meter type and region, please see our industry page. Customers should contact their supplier for details specific to their tariff. 

The default tariff price cap limits how much a supplier can charge customers on default tariffs, including standard variable tariffs, per unit of energy. It doesn’t cap the total cost of a bill. That’s because the amount customers pay also depends on how much gas or electricity they’ve used. Suppliers can charge less than the set level of the cap, but not more. 

We update this chart every six months in February and August, to reflect the levels of the cap that will come into effect in April and October.

Click the ‘more information’ tab above for a summary of the latest trends, details of how to interpret the component costs and allowances, and for information on our methodology.

Policy Areas:

  • Domestic consumers
  • Electricity - retail markets
  • Gas - retail markets

Data Table

Breakdown of the default tariff price cap (GBP £)
Wholesale costsNetwork costsPolicy costsOperating costsEarnings Before Interest & Taxes (EBIT)VATPayment method uplift allowanceHeadroom allowance
2018/19 winter44725813719820541212
2019 summer52127015120422601213

More information

At-a-glance summary

  • The level of the tariff cap is based on the underlying costs required to supply energy. It applies from 1 January 2019.
  • We publish the level of the price cap in February and August to apply on 1 April and 1 October respectively each year.
  • The tariff level will reflect changes in the costs to supply energy. We determine how much each independent component of the cap should change by looking at external cost data. Details of the latest update can be found at Default tariff cap: 1 April 2019 to 30 September 2019.

Relevance and further information

This chart summarises the different costs that make up the default tariff price cap.

We update the level of the cap every six months, either reflecting changes in underlying costs, or increases in inflation. Our calculations cover:

  • wholesale energy costs: how much a supplier has to pay to get the gas and electricity to supply households with energy (we base this on forward prices for energy to be delivered over a 12-month period)
  • network costs: the regional costs of building, maintaining and operating the pipes and wires that carry energy across the country to households
  • policy costs: the costs related to government social and environmental schemes to save energy, reduce emissions and encourage take-up of renewable energy
  • operating costs: the costs incurred by suppliers to deliver billing and metering services, including smart metering
  • payment method uplift allowance: the additional costs incurred by suppliers to bill customers with different payment methods
  • headroom allowance: this allows suppliers to manage uncertainty in their costs, and also offer competitive deals beneath the set level of the cap.
  • Earnings Before Interest and Taxes (EBIT): a fair rate of return allowed for suppliers, to ensure they can finance their businesses.
  • VAT: 5% tax added to the level of the tariff.

Methodology

  • The level of the cap is based on calculations of the costs required for an efficient supplier to provide energy. It also includes some additional allowances to manage uncertainty, and ensure suppliers can finance their activities, amongst other things.
  • We calculate the bill values associated with the different tariff types using a ‘typical domestic consumer’ with ‘medium’ energy use. At October 2018, typical consumption values for a medium consumer are 12,000kWh/year for gas and 3,100kWh/year for electricity (profile class 1). Find out more at Typical domestic consumption values.
  • All prices shown are for a dual fuel customer paying by direct debit (i.e. where a customer takes gas and electricity from the same supplier). 
  • Further details of the methodology for calculating the level of the Default Tariff can be found in our statutory consultation on the default tariff cap and decision documents.

For a detailed breakdown of the cap by meter type and region, please see our page for the latest level for 1 April to 30 September 2019.

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This video explains how we use these cost factors to calculate the levels.

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.

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.