The Energy Price Cap

As of 1 January 2026, the Energy Price Cap stood at £1,758 per year for a typical dual-fuel household paying by Direct Debit. However, Ofgem has today (27 May 2026) confirmed a significant 13% increase, which will take effect from 1 July 2026.

Set by Ofgem, the Energy Price Cap limits what suppliers can charge per unit of gas and electricity, as well as daily standing charges, for households on standard variable (default) tariffs. It's designed to stop customers being overcharged, but it does not cap your total bill. If you use more energy, you pay more, and if you use less, you pay less.

What's Changing from 1 July 2026?

Ofgem has announced the energy price cap will increase by 13% for the period covering 1 July to 30 September 2026. This is the biggest rise since the energy crisis of 2022, when the government stepped in to cap bills at £2,500 – though prices remain 54% below that peak.

The rise is not evenly split between gas and electricity:

• Electricity bills will rise by around 5%
• Gas bills will rise by around 24%

The smaller electricity increase reflects the growing share of renewable generation on the grid, reducing reliance on gas-fired power stations.

For a typical household paying by direct debit for both gas and electricity, the cap will rise by around £18 per month – or approximately £216 per year – if this level were sustained across the full year.

Updated Typical Domestic Consumption Values (TDCVs)

Alongside the price cap announcement, Ofgem has updated the Typical Domestic Consumption Values (TDCVs) used to calculate the cap. These now reflect the fact that households are using less energy than before – around 7% less electricity and 17% less gas compared to the previous review.

As a result:

• Under the updated TDCVs, the new cap is £1,663 per year
• Under the existing (older) TDCVs, the equivalent figure would be £1,862 per year

Energy Price Cap History

* Announced 27 May 2026. Under previous TDCVs this would equate to £1,862.

Why Is the Cap Increasing?

Wholesale gas prices have risen sharply – by around 28% over the past three months – driven by ongoing conflict in the Middle East and wider global energy market volatility.

However, there are some mitigating factors:

• Renewable energy now makes up a larger share of UK electricity generation, which has cushioned the electricity price rise
• Prices remain well below the 2022 energy crisis peak (£2,500 government cap), and are around 54% lower in real terms
• When adjusted for inflation, the new cap is around 6% higher than the same period in 2025

Tim Jarvis, Ofgem CEO, said the price change reflects "continued volatility in global energy markets" and urged households to explore fixed tariffs, change payment methods, or take advantage of smart meter offers to manage costs.

Who Is Affected?

Not all customers will see their bills rise. Around 40% of domestic accounts – approximately 22 million – are currently on fixed-rate tariffs and are unaffected by this increase. For everyone else, the rise applies to the standard variable (default) tariff from 1 July 2026.

Customers on standard variable tariffs include:

• Around 19 million on standard variable direct debit accounts
• Around 7 million on standard credit accounts
• Around 6 million prepayment meter customers

Expert View

What Can You Do to Reduce Your Bills?

Ofgem and energy suppliers have highlighted several options for households looking to manage rising costs:

What Is the Energy Price Cap?

The Energy Price Cap is a legal requirement that energy suppliers must comply with. Set by Ofgem, it protects households against unfair rises in gas and electricity costs on standard variable or default tariffs.

The cap sets a limit on the unit rate (the amount you pay per kilowatt hour) and standing charges (the daily charge whether or not you use energy). It does not cap your total bill – if you use more energy than the average, you pay more.

Your tariff details appear on your energy bill. If you're on a 'Standard Variable' tariff or a 'Deemed Contract', the cap applies. If you're on a fixed-rate tariff, the cap will not affect you until that deal expires.

Price caps are also based on your region, due to transportation costs, and higher rates may apply if you don't pay by direct debit.

Why You Should Consider Switching

With the cap rising significantly, the most effective way to protect yourself from further price fluctuations is to switch to a fixed-rate tariff – either with your existing supplier or a new one. A fixed deal locks in your unit rates for a set period (typically 12–24 months), giving you cost certainty regardless of what happens to the cap next quarter.