Energy price cap costs and predictions

What is the current energy price cap?

On 25 February 2026, Ofgem announced that the new energy price cap will fall by 7% to £1,641 per year for an average household paying for gas and electricity by Direct Debit. This is a 7% decrease (approximately £117) compared to January-March 2026.

While the current energy price cap figure is a useful benchmark, it’s important to remember that the cap limits the unit rate and standing charge your supplier can charge. It’s not representative of your total bill. If you use more energy, you will pay more, and the cap varies based on how you pay.

The table below shows the total annual price cap for a typical dual-fuel household across the three main payment types for Q2 2026 (1 April – 30 June):

Figures are based on Ofgem’s 2026 Typical Domestic Consumption Values (TDCVs) at medium consumption. These are 11,500 kWh for gas and 2,700 kWh for electricity.

What are the current energy price cap unit rates and standing charges?

While the headline cap figure is an annual estimate, your actual monthly costs are determined by two specific rates:

• Unit rate (kWh) – This is the price you pay for the actual energy you consume. It’s measured in kilowatt-hours (kWh). When you turn off a light or turn down the thermostat, you’re not just saving energy, you’re saving money on your unit rate.

• Standing charge – This is a fixed daily fee that covers the cost of being connected to the energy network. You pay this every day, even if you don't use any gas or electricity.

The table below shows the national average rates (including 5% VAT) for customers on a standard variable tariff, calculated by Ofgem. Your supplier cannot charge you more than this for these specific components.

These figures represent the national average, as exact costs may vary based on your location.

Read our handy guides to find out what are energy standing charges, and about understanding kWh.

Future energy price cap predictions

Staying updated on upcoming changes is key to helping you effectively budget for the future.

While the price cap is updated quarterly by Ofgem, analysts at Cornwall Insight (a trusted provider of energy prices forecast data) provide regular forecasting updates on where they expect the cap to go next.

Here’s a summary of the latest price cap predictions for 2026, but it’s important to remember that these figures are for guidance only and aren’t guaranteed.

Price cap prediction figures are estimates and use national averages; however, they are likely to change amid ongoing global events.

How is the energy price cap calculated?

Ofgem reviews and updates the price cap every three months a year (sometimes referred to as every ‘quarter’) to make sure if it fairly reflects the energy market at the time. The review happens every January, April, July and October.

The biggest factor that affects how the price cap itself is calculated is the changing costs of wholesale energy, which is the price suppliers have to pay to buy energy before distributing it to customers.

Other factors that affect the price cap include:

• Operating costs – metering and billing customers.

• Networking costs – maintaining the electricity wires and gas pipes that carry energy to your home. These networks are managed by a Distribution Network Operator (DNO), whose costs for infrastructure repairs and upgrades are factored into the cap.

• Policy costs – supporting government-backed green energy initiatives. This includes funding for projects aimed at reducing greenhouse gases and lowering the nation’s overall carbon emissions.

• VAT – the government sets VAT for energy at 5% for all tariff rates.

• Earnings – the profit the supplier earns from bills.

• Adjustment allowance – to account for any additional unexpected costs, such as supplier failures.

Past energy price cap rates

Here’s an overview of the previous energy price caps:

How will the energy price cap affect me?

Whether the energy price cap affects your monthly outgoings depends entirely on the type of energy plan you have.

If you’re on a variable rate tariff

If you are on one of our variable tariffs, the price cap changes will apply to you. This means your unit rates and standing charges will automatically be adjusted whenever a new Ofgem cap comes into effect.

Because these rates are flexible, you may see your bills fluctuate throughout the year based on both the current cap and your actual energy usage.

If you’re on a fixed rate tariff

If you’ve chosen to lock in your rates with a fixed tariff, your monthly bill won’t be affected by price cap changes for the duration of your contract.

This protects you from any sudden increases in the national cap. However, it also means you won’t automatically benefit from cap decreases until your fixed term ends.

Not sure which one is right for you? Read our guide on fixed vs variable energy tariffs to compare the benefits of flexibility versus long-term price security.

What do I need to do?

With the new energy price cap coming into effect on 1 April 2026, most of the work is done for you behind the scenes. However, there are a few simple steps you should take to ensure your account is accurate and that you’re on the best possible deal for the months ahead.

1. Submit a meter reading on 1 April  – Unless you have a working smart meter, you should submit a gas and electricity meter reading on (or as close as possible to) 1 April 2026. Without a reading, your supplier will have to estimate how much energy you used before and after the change, which could lead to you being overcharged.

2. Look out for your rate notification – Suppliers are required to write to you whenever the price cap changes. Look out for an email or letter from Utility Warehouse in the coming weeks that shows your new unit rates and standing charges.

3. Review your Direct Debit – When the cap falls, your supplier may eventually adjust your monthly Direct Debit. However, this doesn't always happen immediately. If you have built up a significant credit balance over the winter, now is a good time to check if your monthly payments are still at the right level for your expected usage in the spring and summer.

4. Consider future-proofing with a fixed tariff – Energy price cap predictions show that future prices can be volatile. For peace of mind of a set price, check if a fixed energy tariff could save you more over the long term than staying on a variable plan.