Every three months the news announces a new energy "price cap" figure, and every three months people misunderstand what it means. They hear "the cap is £1,800" and assume their bill cannot exceed £1,800. It can — easily. The cap does not limit your bill at all. It limits something else entirely, and knowing the difference is the first step to actually controlling what you pay. Here is how it really works in 2025/26.
The cap is not a limit on your total bill Ofgem's price cap limits the unit rate and the standing charge your supplier can charge — not the amount you owe. Use more energy and you pay more, with no ceiling. The "typical bill" figure you see in headlines is just the cap applied to an average household's usage.
The two parts of every energy bill
For each fuel — gas and electricity — your bill is built from two components:
- The unit rate: the price for each kWh of energy you actually use.
- The standing charge: a fixed daily fee just for being connected, whether you use any energy or not.
For the current cap window, the GB-average capped rates are roughly:
| Unit rate | Standing charge | |
|---|---|---|
| Electricity | about 27p per kWh | about 54p per day |
| Gas | about 7p per kWh | about 33p per day |
Multiply your usage by the unit rate, add a year of standing charges, and that is your bill. The cap sets the rates in that calculation — not the total. Two homes on the same capped tariff can have wildly different bills because one uses twice the energy.
Why the headline "typical bill" misleads
When Ofgem quotes a figure like "£1,800 a year," that is the cap applied to its typical domestic consumption — about 2,700 kWh of electricity and 11,500 kWh of gas a year. If your home is bigger, colder, or busier, you will use more and pay more. If you are out all day in a small flat, you will pay less. The headline number describes an imaginary average household, not you. Our energy bill calculator lets you put in your own kWh from a recent bill for a figure that actually reflects your home.
Standing charges: paying before you use anything
The part that frustrates people most is the standing charge. Across gas and electricity it now adds up to over £300 a year before you have switched on a single light. It covers the cost of the networks, meters and various policy costs, and crucially it is the same whether you are away for a month or running everything at once. Low users feel this keenly — a tiny flat used occasionally can still cost hundreds a year in standing charges alone.
How to actually cut your bill
Because the cap fixes the rates, the only levers left are how much you use and which tariff you are on:
For bigger structural savings, two technologies change the maths entirely. Solar panels cut the electricity you buy from the grid, and a heat pump can lower heating costs — both worth modelling against your actual usage.
Should you fix your tariff?
A fixed deal gives certainty and can sometimes beat the cap, but it locks you in and may carry exit fees. The cap, by contrast, moves every quarter — sometimes down, sometimes up. There is no universal right answer: compare the fixed unit rate and standing charge against the current cap, factor in your appetite for certainty, and decide. Do not assume "fixed" automatically means "cheaper."
Frequently asked questions
No. It caps the unit rate and standing charge your supplier can charge. If you use more energy, you pay more — there is no ceiling on the total amount.
Every quarter. Ofgem announces the next cap a few weeks before each three-month window begins, so rates can shift up or down four times a year.
The headline "typical bill" applies the cap to an average household's usage. Your bill depends on your actual consumption, your region's rates, and your payment method.
It is a fixed daily fee for being connected to the gas and electricity networks, payable regardless of usage. A few tariffs offer lower or zero standing charges but usually with higher unit rates — worth it only for very low users.
Sometimes. Compare the fixed unit rate and standing charge against the current cap before committing, and check for exit fees. Fixing buys certainty, not guaranteed savings.
Figures are estimates at GB-average Direct Debit cap rates for the current window. Your real rates vary by region and payment method, and the cap changes every quarter.