what is the energy price cap

The energy price cap is a limit on how much energy suppliers can charge customers for each unit of energy if they are on a standard variable tariff. The cap is set by Ofgem, the independent regulator for the energy market in Great Britain, and is updated every three months to reflect changes in underlying costs as well as inflation. The level of the energy price cap is based on typical household energy use and reflects recent falls in wholesale energy prices. For example, between 1 October to 31 December 2023, the energy price cap is set at £1,834 a year for a typical household who use gas and electricity and pay by Direct Debit. The cap includes the standing charge and the price for each unit of electricity and gas. The cap is applied to customers on a default energy tariff including those who pay by Direct Debit, standard credit, prepayment meter, or who have an Economy 7 (E7) meter. The energy price cap ensures that prices for people on default energy tariffs are fair and that they reflect the cost of energy.