The energy price cap and the Energy Price Guarantee schemes explained
The energy price cap aims to limit the bills of households on standard and default tariffs. We explain how it works together with the Government’s Energy Price Guarantee – and what you can now expect to pay.
The energy price cap aims to limit the bills of households on standard and default tariffs. We explain how it works together with the Government’s Energy Price Guarantee – and what you can now expect to pay.
What is the energy price cap?
The energy price cap limits the amount energy companies can charge customers who are on default tariffs, including standard variable tariffs (SVTs), and customers who use prepayment meters. It was introduced in January 2019 to make sure consumers don’t pay more for energy than they should.
The cap rate, which is set by the UK’s energy regulator Ofgem, puts a limit on the amount energy companies can charge customers per kilowatt-hour (kWh) of electricity and gas.
Ofgem have announced that, from 1 January 2025, the energy price cap will rise to £1,738 per year for a typical usage household paying by direct debit. This is £21 more than the previous cap but lower than last winter. However, this is still significantly higher than pre-pandemic levels.
For those with a prepayment meter, the cap will rise to £1,690, while those who pay on receipt of a bill will be capped at £1,851.
What effect will the changes to the price cap have on bills?
The average household energy bill will rise by £21 a year from 1 January 2025. Although this is lower than it was last winter, it is still significantly higher than pre-pandemic levels.
Is £1,738 the maximum I will have to pay from January?
No, the energy price cap isn't a limit on how much you’ll pay in total. Your total bill depends on:
- How much energy you use
- Where you live
- How you pay for your energy.
What is capped is the amount you’ll pay for each unit of gas or electricity you use. If you use more than the average, based on a medium-use household, you’ll pay more. And if you pay by cheque, cash or bank transfer when you get your bill, it could be cheaper if you switch to direct debit.
How do I know if I’m on a default tariff?
You’re likely to be on a default tariff if you haven’t switched energy suppliers before or you’ve automatically rolled on to the standard variable rate after your fixed rate tariff came to an end. You’re also likely to be on the standard tariff if your supplier stopped trading and you were switched to a new supplier.
When will the energy price cap next change?
The next Ofgem price cap will be announced towards the end of February, with any changes taking effect from 1 April 2025.
What can I do if I’m struggling to pay my energy bill?
High energy prices, alongside general rises in the cost of living, are making it difficult for many people to afford to pay their bills. But help is available.
First, you should talk to your supplier. They must discuss payment plans and tell you what support is available.
There are also charitable schemes you can apply to for help. Get details of where to apply and more in our guide: What to do if you can’t afford your energy bills.
Government support is also available. See Help with energy bills: available grants and schemes to make sure you claim everything you’re entitled to.
Using less energy
Another way to keep your bills in check is to use less power if you can. See these sources of help for making your home more energy efficient:
What is average usage based on?
The average figure of £1,738 is based on a dual fuel household paying by direct debit, with a typical consumption of 2,700 kWh (kilowatt hours) of electricity and 11,500 kWh of gas.
Ofgem works out the energy price cap based on these calculations:
| Energy use | Example – home type and number of residents | Typical annual gas use (kWh) | Typical annual electricity use (kWh) |
|---|---|---|---|
| Low |
Flat or 1-bedroom house 1-2 people |
7,500 | 1,800 |
| Medium |
2-3 bedroom house 2-3 people |
11,500 | 2,700 |
| High |
4+ bedroom home 4-5 people |
17,000 | 4,100 |
Frequently asked questions
Do the Energy Price Guarantee and energy price cap apply to households using alternative fuels?
No, they apply only to gas and electricity.
Are fixed-term tariffs affected by the energy price cap?
The energy price cap doesn’t apply to fixed rate tariffs, but the price guarantee scheme does. Energy suppliers should adjust fixed tariffs automatically. Customers on fixed tariffs don’t need to take any action to get the benefits of this scheme.
If your fix comes to an end before switching becomes possible again, you may be switched to the standard variable tariff, in which case you’ll be protected by the price guarantee.
If you’re not sure whether you’re eligible for the energy price cap, contact your supplier.
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