Energy Price Cap Rates by Region

The energy price cap is the number that decides what most British households pay for gas and electricity: it governs every standard variable tariff, which is where a household ends up by default when a fix expires and nothing is done. It changes every three months.

It is also widely misunderstood — including by people who follow it closely. This page shows the official Ofgem rates for your region and payment method, and explains what the cap does, what it emphatically does not do, and what makes up the price underneath it.

What the price cap actually caps

The cap limits two things: the unit rate you pay for each kWh of gas and electricity, and the daily standing charge you pay whether you use anything or not.

It does not cap your bill. Your bill is those two prices multiplied by how much energy you get through, and there is no ceiling on that. A large, poorly insulated house on a capped tariff can pay several times what a small flat pays on exactly the same rates.

This matters because the headline figure Ofgem announces each quarter is expressed as an annual amount for a household using a typical amount of energy. Press coverage reports it as “the price cap”, and it lands as though it were a limit on what anyone can be charged. It is not. It is an illustration.

The rates where you live

Pick your region and how you pay. Every price shown includes VAT at 5%.

Why your region changes the price

Ofgem sets a different cap for each of fourteen regions, and the gap between the cheapest and dearest is normally worth tens of pounds a year rather than hundreds — but it is real, and it is not arbitrary.

The bulk of the difference is network costs: what it costs to move electricity and gas across the local distribution network and maintain the pipes and wires. A region with customers spread thinly over difficult terrain costs more to serve per household than a dense urban one. Northern Scotland and North Wales and Mersey typically sit at the higher end for electricity; London and the East Midlands lower.

You cannot change your region, and no supplier can undercut the network charges in it. It is worth knowing mainly so that comparisons against a national average make sense — if you are in a dearer region, the national figure will always look optimistic to you.

Why how you pay changes the price

Ofgem caps each payment method separately, because they genuinely cost suppliers different amounts to serve.

• Direct Debit is the cheapest. The supplier gets paid on a predictable date, administration is automated, and bad debt is lower.
• Standard credit — paying each bill when it arrives — carries a higher cap. The supplier waits longer for its money and a larger share of it is never paid at all.
• Prepayment used to be the most expensive of the three. Since the Government levelised it against Direct Debit it generally sits close to, and sometimes below, the Direct Debit rate.

If you are on standard credit and could pay by Direct Debit, that is one of the few changes that reduces your unit rate without changing supplier or tariff. The trade is that you give up control over the payment date and need to keep an eye on whether the direct debit amount matches your actual use — see energy debt and credit balances for how large those balances get across the market.

What you are actually paying for

Ofgem publishes the cap broken into the allowances that build it up, and the breakdown is more interesting than the headline. Wholesale energy is the line that moves most, but it has never been the whole bill — and the current split is shown below rather than described here, because it changes every quarter.

Network costs, policy costs, the supplier’s operating allowance, an allowance for bad debt and a permitted profit margin make up the rest, with VAT on top. When wholesale prices fall, these other lines do not fall with them, which is why bills never drop as far or as fast as headlines about gas prices suggest they should.

Each line below carries a plain-English explanation of what it pays for, because Ofgem’s own names are accurate and nearly opaque — “headroom allowance”, “EBIT” and “levelisation” mean very little on a bill.

One thing to hold onto while reading them: every line is an allowance in a regulatory model, not a record of what your supplier actually spent. Ofgem is deciding what an efficient supplier ought to be able to recover, not auditing anyone’s invoices. Two suppliers charging the cap have the same allowances and may have very different real costs.

A few are worth knowing about before you look:

• Debt-related costs are other customers not paying. Ofgem lets suppliers recover a share of unrecoverable debt across everybody, so households falling behind genuinely does appear on your bill — see energy debt and arrears for the scale of it.
• Headroom is a deliberate margin of error. The cap is fixed in advance for a whole quarter, so there is a buffer in case costs move faster than the model assumed.
• Levelisation is the transfer that stops prepayment customers paying more for costing more to serve. The difference is spread across everybody instead.
• EBIT is the profit margin Ofgem permits — a permitted return, not a measure of what any supplier actually made.

The “typical bill” is not your bill

The annual figure in the headlines assumes a household using a specific amount of gas and electricity — Ofgem’s medium consumption values. If you use less, you pay less. If you use more, you pay more, and the cap does nothing to stop that.

Two households in the same street on the same tariff can differ by a factor of three. Floor area, insulation, how many people are home during the day, whether you heat with gas or electricity, and whether anyone is in all winter matter far more than which supplier’s logo is on the bill. Our typical household energy use page shows what low, medium and high actually mean in kWh, and the energy bill calculator will put your own numbers against the rates above.

Can you beat the cap?

Often, yes — but it depends on when you look, and the answer changes every quarter.

Because Ofgem announces each new cap about six weeks before it starts, you generally know which way prices are heading before you have to decide anything. A fixed tariff priced below the announced next cap is worth serious consideration. One priced above it is a bet that the cap after that will rise further.

Tracker and time-of-use tariffs work differently again: they follow wholesale prices rather than the cap, which can be markedly cheaper when demand is low and wind is strong, and markedly more expensive on a cold, still evening. Our weather and demand page explains why those two things move together, and we review the Octopus Tracker and Octopus Agile tariffs in detail.

Whatever you choose, check the exit fee before you fix, and check how each supplier actually treats its customers — the cheapest unit rate is poor value if getting a mistake corrected takes three months. Our supplier reviews and the official complaints figures both speak to that.