Ofgem’s energy price cap works by setting a maximum limit on how much suppliers can charge consumers for a unit of energy.

The idea behind the price cap is to provide a level of protection for consumers, and to prevent energy companies from charging excessively high prices.

<aside> ⚠️ Ofgem’s energy price cap is a cap on the unit rate cost of energy, not on your total bill. The more energy you use, the higher your bill will be.

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The cost of your energy is set by the price cap if you are one of the 34 million UK customers on a default or variable tariff.

If you are one of the 19 million households on a fixed rate, changes to the price cap will not impact the amount you pay while you are in contract.

Ofgem updates the price cap every three months to reflect changes to wholesale energy costs, as well as additional underlying costs for suppliers.

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The price cap fell by 7% on 1 July 2025.

The annual bill for a typical dual-fuel household paying by direct debit dropped from £1,849 to £1,720

On 1 October 2025 the price cap will rise by 2% to £1,755 a year

The price cap is based on a typical household's energy usage.

However, actual energy consumption varies depending on household size, energy efficiency, and lifestyle.

Last updated: September 2025