Energy price cap explained

Suppliers can't charge you more for each kilowatt hour (kWh) than the cap we set and we monitor suppliers to make sure their default tariff rates comply.

Here are some examples of the things we include when calculating the price cap:

• Wholesale energy costs. This is the amount suppliers pay for the energy they supply to consumers.
• Network costs. These relate to building and maintaining the energy networks that carry energy to consumers' homes.
• Policy costs. These relate to government schemes to save energy, reduce emissions and promote renewable energy.
• Supplier operating costs
• VAT: 5% tax is added to the level of the tariff.

We calculate the price cap using a typical domestic consumer with medium energy use. Find out more about average energy use.

The price cap doesn't cap your total bill, which will change depending on how much energy you use. The way you pay for your energy, where you live, your meter type, as well as your consumption will affect your energy bill.  

We update the level every three months to reflect inflation and changes in underlying costs.

Right now, we’re seeing volatile gas prices that are affecting everyone around the world. As a result, the amount suppliers pay to buy energy on the wholesale market has risen sharply.

And because gas is used for electricity generation, this pushes up retail electricity bills as well as retail gas bills.

Part of our duty as a regulator is to work for you as a bill payer. Our experts watch the market and work to set a fair price cap that reflects the global situation. 

Government is also doing its part rolling out the new energy bills support scheme and the energy price guarantee.   

We’re also doing other things to help stabilise the market over the longer term to reduce our reliance on gas and help protect customers from similar price shocks in the future. For more information see:

-    Energy Bills Rebate: How the Government plans to help rising bills
-    Advice and services if you're struggling with energy costs

For further information on the Energy Price Guarantee, please visit Energy bills support factsheet - GOV.UK (www.gov.uk).

The energy price cap will continue to be calculated and indicates what default tariff consumers would pay if the Energy Price Guarantee were not in place.

To help protect consumers, the Government announced the Energy Price Guarantee which came into effect on 1 October 2022.

This will reduce the unit cost of electricity and gas so that households with typical energy use in Great Britain would pay, on average, around £2,500 a year on their energy bill until 31 March 2023 and around £3,000 a year until 31 March 2024. These figures are based on a household with typical consumption on a dual electricity and gas bill paid by direct debit.

The amount you pay will depend on how much energy you use, where you live, how you pay for energy, and your metering arrangement. 

Customer with typical usage, paying by direct debit* 

The table below shows the average capped rates for a customer with typical usage paying by direct debit on a default tariff. 

*Rates are averages and will vary by region, payment method and meter type. Contact your supplier for personalised information.

Standing Charges 

Average standing charges for customers on default tariffs will remain capped in line with the levels set for the default tariff cap for a typical dual fuel customer paying by direct debit.