Energy price caps: what’s it all about?

Understand what the energy cap is and how it may affect your energy bills.

To read our latest news on prices, and how you may be affected by the latest Ofgem Price Cap, see our energy price news page.

What is the energy price cap?

The energy price cap is a set limit on how much we charge you for the energy you use. It was introduced in 2019 by Ofgem, UK’s energy regulator. The energy price cap is updated by Ofgem twice a year.

Your energy bill can still go up or down depending on how much gas and electricity you use. But, the price per unit and standing charge will never go above the energy price caps.

There are two types of price cap: one for default tariffs and one for prepayment tariffs (also known as pay-as-you-go tariffs).

Which tariffs are capped?

If you’re on a fixed-price tariff, your prices won’t be capped. That’s because fixed-price tariffs tend to be lower than variable tariffs and you’ve locked in your price for the length of your contact.

Your tariff will only be capped if you’re on a standard variable or default tariff.

How do Ofgem decide the price caps?

Ofgem set their price caps by working out how much it costs energy suppliers like us to supply you with gas and electricity. These costs cover things like buying wholesale energy, maintaining supply pipes and wiring, and operating costs.

Will my energy bills go up or down with the price cap?

If the cost of getting gas and electricity to your home goes up or down, then your bill will also go up or down. But how much your gas and electricity bill is will depend on:

  • How much gas or electricity you actually use. So, if you use more energy, then your bill will go up. If you use less, then it will go down
  • The tariff you’re on and how you pay for your energy
  • The type of energy meter you have
  • Where you live in the UK
  • The tariff you’ve chosen
  • How you pay for your energy (prepayment, Direct Debit or standard credit)