Energy price cap costs and predictions

With energy price cap changes causing energy prices to fluctuate, many customers are choosing to fix their energy rates for price certainty for up to 12 months.

If you’re already a UW customer and on a variable tariff, and would like to move to a fixed rate tariff, call us on 0333 777 3236 and we’ll get you sorted.

Or, if you’re not with us yet, you can get a quick quote in a few clicks.

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What is the energy price cap?

The energy price cap is the maximum price per unit of gas and electricity suppliers can charge customers on a standard (or ‘default’) variable tariff. This includes both unit rate and standing charge.

The cap is set to make sure that the prices of energy are fair to customers, while also covering suppliers’ costs of buying and supplying energy.

Who sets the energy price cap?

The price cap was introduced at the start of 2019 by the government and is set by the UK’s independent energy regulator, Ofgem. While the government sets the regulations for the energy sector, Ogfem operates within the regulations to action them.

How is the energy price cap calculated?

As of August 2022, Ofgem review and update the price cap every three months a year (sometimes referred to as every ‘quarter’) to see 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 of energy that suppliers have to pay to buy it before distributing it to customers.

Other factors that affect the price cap include:

  • Operating costs – metering and billing customers.

  • Networking costs – maintaining electricity wires and gas pipes that carry energy to customers’ buildings.

  • Policy costs – supporting government-backed green energy initiatives such as reducing the nation’s 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.

The current energy price cap

The current energy price cap is set at £1,738 per year, which is the national average price that will be paid by typical households. It was set on 1 January 2025 and will last until 31 March 2025.

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

Upcoming Energy Price Cap

Q2 2025 (April–June): Ofgem has confirmed that the energy price cap will increase to £1,849 per year for a typical household.

Energy price cap predictions 2025

According to Cornwall Insight’s, the energy market forecast suggests the following changes for the next few quarters:

Q3 2025 (July–September):
Total : £1,756.02 per year for a typical domestic customer.

Q3 2025 (July–September):

  • Electricity (2,700 kWh): £882.16 per year

  • Gas (11,500 kWh): £873.87 per year

  • Total : £1,756.02 per year

Per Unit Costs (July–September 2025):

  • Electricity Standing Charge: £0.55/day

  • Electricity Unit Rate: 25.20 p/kWh

  • Gas Standing Charge: £0.30/day

  • Gas Unit Rate: 6.65 p/kWh

Past energy price cap rates

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

January 2025 (Current Cap)

October–December 2024

July–September 2024

April–June 2024

£1,738 per year (+1.2% from the previous quarter)

£1,717 per year (+10% from the previous quarter)

£1,568 per year (-7% from the previous quarter)

£1,690 per year (-12% from the previous quarter)

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How to beat the energy price cap with UW

Get energy that’s guaranteed to be under the price cap with UW. And our amazing fixed tariffs let you lock in low prices for up to 12 months, protecting you against further price cap rises within that time.

Will the energy price cap affect me?

If you’re on one of UW's variable tariffs with UW, the price cap changes will apply to you, and you may see fluctuations to your bill whenever the price cap changes – also depending on your energy use.

Important information about the energy price cap

If you’re on a fixed rate tariff, your monthly bill won’t be affected by price cap changes throughout the fixed tariff’s duration.

If you’re on a variable rate tariff, your prices will be affected by price cap changes, and will automatically be adjusted when each price cap change comes into effect.

How can I reduce my energy bill?

Besides getting ahead of energy price cap rises by switching to a fixed energy tariff with UW, you can also take steps to reduce your overall energy usage and lower your bill.

Alongside energy, you can add broadband, mobile and insurance to your UW account. The more services you bundle, the more discounts you get.

  • Earn cashback on your everyday shopping

The UW Cashback Card is exclusive to our customers, and cardholders can get up to 10% cashback with UW’s retailer partners. All cashback earned with the card automatically comes straight off the next monthly bill.

Cutting down on energy can be as simple as making sure all the lights are switched off in unused rooms, but also as unexpected as turning appliances off by the mains to prevent ‘phantom energy loss’.

Smart meters let you track your energy use in near-real-time, and display it in pounds and pence – so you can see how to adjust your habits more easily.

Do I need to submit a meter reading after each price cap?

We recommend submitting a meter reading every month, especially before a price cap change. If you don’t provide a reading on the day before the price cap update, your bill may be estimated. This could later require adjustments, which may affect your payments. To ensure accurate billing, please submit your reading in time.

Am I eligible for winter fuel payment?

To check your eligibility for the Winter Fuel Payment and get full details on how to apply, please visit https://www.gov.uk/winter-fuel-payment.

What are wholesale energy prices?

Wholesale energy prices are the costs suppliers pay to purchase electricity and gas from the market to meet customer demand.

When will I see changes on my bill?

All bills are issued monthly in arrears. For example, if the price cap takes effect on January 1st, your January bill (issued around January 15th) will still reflect December’s consumption. The updated prices will first appear on your February bill.

What do I need to do?

If you're concerned about upcoming price changes, here are some steps you can take:

  • Submit your meter reading before the price cap changes to avoid estimated billing.

  • Check your tariff to see if you’re on the best available rate.

  • Explore energy-saving tips to reduce your consumption.

  • Stay updated by following our announcements on price cap changes.

Are all suppliers raising their prices?

Not all suppliers will raise their prices at the same rate, but most will adjust their tariffs based on the new energy price cap. If you're on a fixed tariff, your price may not change until your contract ends. If you're on a standard variable tariff, your price may change in line with the cap.
Click here to get more information on Fixed vs variable energy tariffs

When will the next energy price cap be announced?

We review and update the price cap level every three months. The levels for the next periods will be announced by:

  • 27 May 2025 – period 1 July 2025 to 30 September 2025

  • 27 August 2025 – period 1 October 2025 to 31 December 2025

  • 25 November 2025 – period 1 January 2026 to 31 March 2026

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The energy price cap

The government has announced that the energy price cap will increase on 1 April 2025. You don’t need to do anything - we’ll be in touch with all our customers on a standard variable tariff in the coming weeks with details of how this will impact you.