Energy price cap and standing charges explained

What the energy price cap is, the costs included such as the standing charge, and how they change over time.

Find the energy price cap unit rates and standing charges where you live.

What is the price cap

For each of the energy tariffs they offer, your supplier decides the cost of:

  • each unit of electricity and gas, called the unit rate – this is calculated in kilowatt hours (kWh)
  • the standing charge, which you pay every day even if you do not use any energy on that day

We set the energy price cap. This is the maximum amount your supplier can charge for a unit of energy and standing charge together.

It does not limit the cost of your total bill. The more energy you use, the higher your bill will be.

Both the level of the price cap and the level of standing charge you will pay can vary depending on:

  • where you live
  • how you pay for your energy (Direct Debit, standard credit or prepayment meter)
  • the fuel type you use (gas or electricity)
  • the type of meter you have

Read the update on our standing charges review.

Who the price cap protects

The price cap protects people who are on tariffs where the unit rate can go up or down depending on the energy market. These are called standard variable tariffs.

You are not protected by the price cap if you:

How we calculate the price cap

We calculate the price cap based on the cost of:

  • buying energy on the open market (wholesale costs)
  • building and improving the pipes and wires that transport energy (network costs)
  • supporting government social and environmental schemes, like Warm Homes Discount (policy costs)
  • day-to-day supplier activity, for example for customer service, marketing, metering and debt (operating costs)
  • how much the supplier makes before any interest or tax (earnings before interest and tax, sometimes called EBIT)
  • uncertain costs and risks (headroom)
  • making sure prepayment and Direct Debit customers pay the same standing charge (levelisation allowance)
  • VAT (5%)

These costs may go up or down depending on changes to energy prices, government policy or level of investment in the energy network. Any changes will affect the level of the price cap.

We use typical domestic consumption values (TDCV) to give you an idea of how much energy you could use in a year, which can help you to understand your bill.

We set the price cap level every 3 months. We also publish any changes to the costs in the latest summary letter on our Energy price cap (default tariff) levels page.