Understanding the Ofgem price cap

Last updated: 2026-05-27 · PlainEnergyBills

What the price cap is

Ofgem's default tariff price cap is the maximum unit rate (per kWh) and standing charge (daily) that energy suppliers can charge on standard variable tariffs (SVTs). It covers GB households on those tariffs that are not on a fixed-rate deal. The cap was introduced under the Domestic Gas and Electricity (Tariff Cap) Act 2018 and has been the dominant feature of UK retail energy pricing since the 2022 wholesale-gas crisis.

How it is calculated

Ofgem updates the cap quarterly. Each level reflects wholesale energy costs, network costs, and operating / policy / margin allowances published in Ofgem's cap methodology. This extract stores the resulting typical dual-fuel bill and the unit/standing rates; it does not split those shares, so this page does not quote wholesale, network, or policy percentages. Network costs are set by Ofgem's separate price-control framework (RIIO-ED2 for distribution, RIIO-T2 for transmission).

Quarterly publication cadence

Ofgem publishes the new cap approximately 6-8 weeks before its effective date. The Q1 cap (effective 1 January) is published in late November. Q2 (April) is published late February. Q3 (July) is published late May. Q4 (October) is published late August. Suppliers receive the new cap parameters and must reset standard variable tariff rates to comply.

Regional variation

Merseyside & North Wales is currently the most expensive region (£1,950) and East Midlands the cheapest (£1,805) - a £145 gap for identical usage. The regional gap reflects underlying distribution-network costs: dispersed, sparsely-populated networks cost more per customer than dense urban ones. See the full region rankings.

Fixed-rate deals vs the cap

Suppliers can offer fixed-rate deals priced above or below the prevailing cap. This extract is the default-tariff ceiling series, not a fixed-deal survey, so this page does not quote a typical discount. Switching to a fixed deal is how a household leaves quarterly SVT resets; PlainEnergyBills does not recommend a supplier or a tariff.

Limitations of the cap

The cap controls maximum unit rates but does not control total bill, a household can still face high bills through high consumption. The cap does not apply to commercial energy or off-grid heating fuels (oil, LPG). Standing charges within the cap have risen sharply 2021-2024, prompting Ofgem to consult on a reformed standing-charge structure.

Common pitfalls

• Confusing the price cap with a price freeze, the cap is a maximum, not a guaranteed price.
• Assuming all suppliers charge the cap; fixed-rate deals sit outside this extract.
• Switching purely on headline unit rate without checking the standing charge.
• Ignoring the regional dimension, caps differ across the 14 distribution networks.
• Failing to read exit-fee clauses before committing to a 12 or 24-month fix.

UK retail energy markets are now defined by the Ofgem cap. Understanding how it is set, why it varies by region, and how the typical-bill series diverges from the standing-charge series is the foundation of reading this registry.

Related guides

• Unit Cost vs Standing Charge: How Your Bill Splits
• Switching Energy Suppliers Since 2022
• Why Energy Prices Vary Across UK Regions
• The Standing Charge Controversy
• Energy Bill Debt and Support Schemes
• Reducing Your Energy Bill: Tariffs, Usage, Insulation

Editorial note

PlainEnergyBills explains the UK regulated energy market, Ofgem price cap, regional variations, supplier dynamics, and bill mechanics. We are not a price comparison site and do not accept supplier commissions; for switching, use a CMA-accredited comparison service.