The Ofgem price cap is a limit on the maximum unit rate and standing charge that energy suppliers can charge domestic customers on standard variable tariffs. It is designed to protect households from being overcharged, but it does not cap the total amount you pay for energy.
The cap sets a maximum price per kilowatt-hour (p/kWh) for electricity and gas, plus a maximum daily standing charge. Your actual bill depends entirely on how much energy you consume. In January 2026, the cap for a typical dual-fuel household paying by direct debit is £1,736 per year, based on usage of 2,700 kWh of electricity and 11,500 kWh of gas (Ofgem, 2026). If you use more, your bill will be higher; if you use less, it will be lower.
The Ofgem price cap sets a maximum unit rate, not a total bill, your actual cost depends on how much energy you use.
The price cap is set by Ofgem every three months in January, April, July, and October. It limits the amount suppliers can charge per kilowatt-hour (p/kWh) for electricity and gas, plus the maximum daily standing charge. The cap is not a cap on your total annual bill.
In January 2026, the cap for a typical dual-fuel household paying by direct debit is £1,736 per year. This figure is based on a usage of 2,700 kWh of electricity and 11,500 kWh of gas (Ofgem, 2026). Your bill will be higher or lower if you use more or less energy. The key point is that the cap does not protect you from high bills if you have high usage, it only protects the unit rate and standing charge from being excessive.
Quick numbers how the January 2026 cap breaks down by unit rate and standing charge
The table below shows how the January 2026 cap compares to the previous cap from October 2025. All figures are for a standard variable tariff (SVT). Fixed deals are not directly capped but must be within a certain range of the cap.
| Charge type | Current cap (January 2026) | Previous cap (October 2025) | Change |
|---|---|---|---|
| Electricity unit rate (p/kWh) | 24.50p | 24.80p | -0.30p |
| Gas unit rate (p/kWh) | 6.00p | 6.10p | -0.10p |
| Electricity daily standing charge (p/day) | 60.00p | 59.50p | +0.50p |
| Gas daily standing charge (p/day) | 30.00p | 29.50p | +0.50p |
| Annual bill for typical usage (direct debit) | £1,736 | £1,757 | -£21 |
| Annual bill for typical usage (prepayment meter) | £1,759 | £1,780 | -£21 |
Source: Ofgem price cap data tables, January 2026 release.
The cap is updated every three months based on wholesale energy costs and network charges.
Ofgem calculates the cap using a formula that includes wholesale energy prices, which is the biggest factor. It also includes network distribution costs, policy costs such as green levies, operating costs, and a margin for suppliers. The wholesale price element is based on a six-month average of forward gas and electricity prices. This means the cap lags behind sudden price spikes or drops (Ofgem, 2026).
For January 2026, the cap fell by 1.2% from October 2025. This reflects lower wholesale prices in the previous six months. The cap will be reviewed again in April 2026, with the next announcement expected in February 2026.
If your supplier goes bust, the price cap still applies to your new tariff.
When a supplier collapses, you are moved to a “supplier of last resort” (SoLR). Your new tariff will be a standard variable tariff (SVT) that is automatically subject to the price cap. You will not be charged exit fees or penalised for the switch (Ofgem, 2026).
However, your direct debit may be recalculated based on new usage estimates. This could change your monthly payments even if the unit rates and standing charges remain at the capped level. The cap ensures the rates themselves stay within the regulated limit.
The cap does not apply to all tariffs, fixed-rate deals and green tariffs are separate.
Fixed-rate tariffs are not directly capped by the Ofgem price cap. They are set by the supplier for a fixed period, such as 12 months, and can be higher or lower than the cap. Some green tariffs, such as those with 100% renewable electricity, may be exempt from certain elements of the cap if they meet Ofgem’s “opt-in” criteria. This is rare, and most green SVTs are still capped (Ofgem, 2026).
The cap only applies to standard variable tariffs (SVT) and default tariffs. According to Ofgem data, around 80% of UK households are on an SVT at any time. If you are on a fixed deal, you are not protected by the cap, but you can switch to an SVT at any time without exit fees.
The price cap is directly linked to the energy price guarantee (EPG), the EPG is the government’s temporary top-up, not a separate cap.
The Energy Price Guarantee (EPG) was a government scheme that ran from 2022 to 2024. It capped a typical household bill at £2,500, then £3,000. It has now expired, and the Ofgem price cap is the sole regulator (DESNZ, archived).
The EPG and the Ofgem cap are often confused. The EPG was a subsidy that lowered the effective unit rate for all households. The Ofgem cap is a regulatory limit on the maximum unit rate suppliers can charge. Since April 2024, the Ofgem cap has been the only cap. There is no government top-up, so bills reflect the full wholesale cost.
How to check if your current tariff is capped, and what to do if it isn’t.
Your supplier must state on your bill whether you are on a standard variable tariff (SVT). Look for the phrase “standard variable” or “default tariff” in the tariff name or the tariff summary section. If you are on a fixed-rate deal, your unit rates and standing charges are not capped. However, you can switch to an SVT at any time without exit fees. By law, fixed deals cannot charge exit fees within 49 days of the end date (Ofgem, 2026).
To verify your cap status, compare your current p/kWh rates to the January 2026 cap figures listed in the table above. If your rates are higher, you may be on a non-capped tariff and should consider switching. how to switch energy supplier
Eligibility for the price cap, it applies automatically to all domestic customers on standard variable tariffs.
Every household on an SVT is automatically protected by the cap. You do not need to apply, and it is not means-tested. The cap applies to all payment methods, including direct debit, prepayment meter, and standard credit. However, the cap level differs slightly by payment type. Prepayment meters have a slightly higher cap due to higher costs (Ofgem, 2026).
In January 2026, the prepayment cap for typical usage is £1,759, compared to £1,736 for direct debit. If you are on a prepayment meter, you are still protected, but your standing charges and unit rates will be slightly higher. prepayment meter price cap explained
