What is the energy price cap?
The energy price cap will rise by 13% from July to September 2026, having previously fallen by 7% in the preceding period due to government changes, but what is the energy price cap?
Put simply, the energy price cap is a hard limit on the maximum charges energy suppliers can ask for, enforced by the Office of Gas and Electricity Markets (Ofgem).
As a government regulator, Ofgem protects the interests of consumers. They apply the energy price cap to both the charge per unit of energy and the standing charge on the tariff from energy suppliers to prevent consumers being unfairly overcharged. The cap is reviewed every three months, in January, April, July, and October.
By falling 7% in April, this means the price cap for an average dual fuel household will drop by £117 until July, when it will rise again by £18 per month.
What is a 'charge per unit of energy'?
Power is measured in Kilowatts (kW). Different appliances and machines use different amounts of power at different rates. A Kilowatt-hour (kWh) measures the total quantity of energy, which is the power used per hour. Put another way, power is the current speed of a car, while the energy is the total distance travelled. For example, a 1,000-watt (1 kW) toaster runs for one hour and uses 1 kWh. A 2,000-watt (2 kW) kettle runs for 1 hour and uses 2 kWh.
To simplify energy costs, 1 kWh is used as the standard unit for billing. You are charged for each 1kWh of energy you use.
What is a 'standing charge'?
A standing charge is a fixed daily fee that is charged regardless of how much gas or electricity is used. This is like a phone line fee. When you pay the standing charge, this covers the expenses of the infrastructure and the service to you. These costs include things like installing and maintaining pipes, pylons, and cables, to engineers, customer service agents, and buildings… all things that energy companies need to deliver energy to your property.
Ofgem calculates the associated fees for each of these factors and even includes a small cost to account for unexpected circumstances and to allow the companies to make a profit. While these costs are part of providing any service, if you use less energy, the standing charges can become a larger percentage of the total bill, so it is important to be aware of them.
What determines the price of energy?
There are several factors that come into play when determining the price of each individual energy type. The biggest factor is that energy prices are traded on a global market. When UK energy suppliers buy from the companies that produce the energy, the local situation impacts the availability of fuel. This means that the price of a given type of energy can fluctuate wildly in certain circumstances. This could be due to natural disasters, political issues, and even war.
One surprising feature of UK energy prices is that the price of electricity is set by the cost of gas. Gas is the most expensive power source in the UK needed to meet the demand of the UK power network, so all other UK energy is priced against this cost in case of shortfalls. According to a recent post from the Department for Energy Security and Net Zero's LinkedIn page, the Government are investigating to break the dependence on gas and global markets that currently impacts around "30% of Britain's renewable generation".
Why was the Energy Price Cap implemented?
In 2019, the energy price cap was introduced to protect consumers from increased costs associated with default tariffs and a 'loyalty penalty' because they did not switch suppliers and were charged more than those who did. At the time, many customers were overpaying hundreds of pounds as they had not switched from the default deal tariff. More recently, the cap has been used to guard against increased costs caused by volatile energy prices. Due to the current energy crisis, Ofgem now reassess the cap every three months; it was originally every six months.
What can I do to help keep my energy bill down?
The energy price cap prevents increased costs but does not stop them entirely. While you cannot directly change the standing charges on your bill, you can make changes to decrease your energy consumption.
By switching to greener (lower wattage) appliances, you can decrease your kWh. According to the Energy Saving Trust, using an A-rated energy efficient appliance could make a big difference. As an example, an older model fridge could be using up to four times as much energy when compared with modern models (Energy Savings Trust, 16th October 2025), due to the more advanced insulation and compressor technology used today. Many new appliances include eco modes, which make them run more efficiently (requiring less water or electricity) but take a longer time. Overall, switching to eco mode makes consumer's energy and water bills lower, as well as reducing CO2 emissions.
One of the best ways to decrease your energy consumption is by identifying energy waste with an energy monitoring system. HeatingSave is a great solution to this problem. Not only can you tell when your energy usage is highest, you can also identify when and where energy is wasted. HeatingSave can then learn your building's heat loss profile and optimise when your heating system operates.
Finally, avoid wasting energy by turning off lights, appliances, and devices when not in use. While some of these still require manual interaction, most building controls can be handled by HeatingSave. With occupancy detection, real-time temperature readings, and pattern learning algorithms, HeatingSave can efficiently control your building and reduce your energy usage. Talk to us today to find out more.