Back in 2019, the UK government introduced the Energy Price Cap to stop energy suppliers from overcharging customers on default tariffs. Since then, it has served as a safety net for millions of households struggling with unpredictable electricity and gas bills. The cap, set by the energy regulator Ofgem, limits the maximum amount suppliers can charge per unit of gas and electricity, as well as the standing charge. This means your total bill depends on how much energy you actually use the more you use, the higher your cost, but never beyond the capped rate per unit.
From 1 October to 31 December 2025, the average annual energy price cap for a typical household paying by Direct Debit is £1,755, up 2% from £1,720 in the previous quarter. While this increase may seem small, it highlights how volatile global energy markets continue to influence local bills. For many families, that slight rise could still feel significant, especially as winter approaches and usage climbs.
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How the New Price Cap Impacts You
The energy price cap changes every three months in January, April, July, and October to reflect shifts in wholesale energy prices, government policy costs, and operational charges that suppliers face. Even though Ofgem reviews the cap regularly, it does not mean all energy bills will automatically go down when the cap falls or up when it rises. Instead, the cap ensures fairness by keeping energy companies from charging unreasonable rates during volatile periods.
For the October to December 2025 quarter, the new cap represents a moderate rise due to slight increases in electricity wholesale prices and standing charges. Still, Ofgem believes it’s necessary to maintain market stability and protect smaller suppliers from collapsing under cost pressures.
| Period | Average Annual Cap (£) | Change (%) |
|---|---|---|
| 1 Jul – 30 Sep 2025 | £1,720 | ↓ 7% |
| 1 Oct – 31 Dec 2025 | £1,755 | ↑ 2% |
| 1 Jan – 31 Mar 2025 | £1,738 | ↑ 1% |
| 1 Apr – 30 Jun 2025 | £1,849 | ↑ 6% |
These small adjustments can add up over time, and many energy experts warn that the next review in January 2026 could bring another revision, depending on how global gas prices behave through the winter.
Electricity and Gas Rates Explained
Under the new cap, the average cost for electricity and gas has shifted slightly, with notable increases in standing charges. This means that even if your usage stays the same, you could see your bill rise due to higher fixed daily costs.
| Energy Type | 1 Jul–30 Sep 2025 | 1 Oct–31 Dec 2025 |
|---|---|---|
| Electricity | 25.73p per kWh / 51.37p daily | 26.35p per kWh / 53.68p daily |
| Gas | 6.33p per kWh / 29.82p daily | 6.29p per kWh / 34.03p daily |
While gas unit prices dipped slightly, the daily standing charge increase will affect most households. Critics argue that high standing charges penalize low-energy users, such as pensioners or those living alone, who pay the same fixed fee regardless of their consumption level.
Why the Cap Keeps Changing
Every quarter, Ofgem reviews the cap to ensure it reflects the true cost of supplying energy in the UK. It takes into account a range of factors including wholesale prices, policy costs such as green energy initiatives, network maintenance fees, and supplier profit margins. If global energy prices surge, these costs feed directly into the cap.
Ofgem’s CEO, Jonathan Brearley, explained:
“No price rise is ever welcome, but the cap helps ensure fairness. The cost of energy remains a huge challenge, driven largely by global gas markets. That’s why we’re focused on building a more secure, homegrown energy system for the future.”
This quarterly review process means customers are protected from sudden spikes but also don’t immediately benefit when prices drop, it’s a balance designed to maintain both fairness and stability.
Who Is Protected Under the Price Cap
The cap applies automatically to customers on standard variable or default tariffs, regardless of their supplier. This includes those paying through Direct Debit, prepayment meters, Economy 7 meters, or standard credit billing. Fixed-rate tariff customers are not affected until their contract expires, at which point they can either renew a fixed deal or move onto the capped tariff.
For many households, staying on a standard tariff can be beneficial when prices are stable, but switching to a fixed plan might save money if rates are expected to climb in future reviews. Ofgem encourages consumers to regularly check deals, as some suppliers may offer tariffs below the cap for limited periods.
What You Can Do to Lower Your Energy Bills
Even with the cap in place, families can take several steps to keep their energy bills manageable. Here are a few practical strategies that make a noticeable difference over time:
- Track and manage your usage: Using smart meters helps you see how much energy you use daily and where you can cut back.
- Pay by Direct Debit: This payment method is usually cheaper than paying on receipt of a bill or through prepayment.
- Look for fixed-rate deals: Some energy suppliers offer competitive rates below the cap for a set period.
- Improve energy efficiency: Small upgrades like LED lighting, better insulation, and smart thermostats can significantly reduce consumption.
- Check government assistance: You might qualify for support through the Warm Home Discount
or Winter Fuel Payment.
These measures not only help save money but also make homes more sustainable and resilient to future price changes.
When the Next Price Review Is Coming
Ofgem’s next cap review will be announced on 25 November 2025 for the period covering 1 January to 31 March 2026. Additional reviews will follow on 25 February 2026 and 27 May 2026, covering the following quarters. These reviews are vital in keeping the energy market fair and responsive to global trends, while also providing consumers with predictability.
FAQs
Who decides the energy price cap?
The UK energy regulator, Ofgem, sets the cap to ensure energy companies charge a fair price on default tariffs.
Does it apply to fixed tariffs?
No. Fixed tariffs are excluded from the cap, though their rates often align with market trends to stay competitive.
Why are standing charges increasing so much?
Standing charges cover supplier operations, network upkeep, and meter services. While they ensure infrastructure stability, many critics believe they unfairly impact low-energy users.
Can the price cap be removed in the future?
Ofgem is reviewing whether to retain or replace it with a more flexible pricing system. Some argue competition should set prices, while others view the cap as vital for consumer protection.
When will the next cap change take effect?
The next update will take effect in January 2026, based on Ofgem’s quarterly pricing schedule.
