The energy price cap 2026: What does it mean for you?

The energy price cap is set at £1,663 until 30 September but will increase to £1,723 for the period from 1 October to 31 December - a 4% jump.

In this guide, we'll look at the energy price cap, predictions for the energy price cap this year and the prepayment price cap.

What is the price cap?

The energy price cap is a cap on the price that suppliers can charge customers for unit rates and standing charges on standard variable tariffs. It’s reviewed 4 times a year and is set by Ofgem, the energy regulator. It was introduced to protect customers from high energy prices.

The level of the price cap for the current period (1 July to 30 September 2026) is £1,663. This is the annual cost for a medium-sized household on a dual fuel tariff that uses an average amount of energy and pays by Direct Debit.

The main reason for this price cap increase (13% from the previous cap) is because the conflict in the Middle East is now filtering through to UK energy bills, as had been predicted when the conflict began. Wholesale energy prices have risen as a result of the closure of the Strait of Hormuz, which is pushing up the price we pay in turn.

What will the next price cap be?

The next price cap (in force from 1 October to 31 December) will increase by 4%. The figure for an average use household will be £1,723. Prices are now predicted to stay at this level or even increase further going into 2027.

What is the prepayment price cap?

The prepayment price cap works in the same way as the regular cap. Its level for the current period is £1,620, but it will increase to £1,678 from 1 October. It’s usually higher than the standard cap because it costs more for suppliers to bill customers with prepayment meters. But the government is now providing a small discount to prepayment price cap standing charges through the Energy Price Guarantee.

How does the price cap affect me?

The price cap only affects those on standard variable tariffs. If you’re on a standard variable tariff, it’s important to remember that the price cap is not a cap on bills. If it’s £1,663, that doesn’t mean that’s the maximum you pay. If you use more energy, you pay more. If you use less, you pay less.

What's the price cap going to be in future?

It’s difficult to confidently predict what the price cap is going to be in future because wholesale energy prices are so easily influenced by external factors. This is what makes it so difficult to advise whether it’s a good idea to fix your energy deal or stay on a standard variable tariff.

Some recent examples have been:

• The Russia-Ukraine war.
• Strikes at liquified natural gas plants in Australia.
• Disruption in Red Sea shipping as a result of the Israel-Hamas conflict.

The Middle East conflict has been particularly difficult for the wholesale market. With prices likely to stay high, finding a fixed deal that secures your rates for the next 12 months could be the best path through the rest of the year going into 2027.

Suppliers regularly release predictions for the year ahead. These predictions are an average of British Gas, E.ON Next and EDF's predictions (valid as of 26 August 2026):

How is the price cap calculated?

The price cap is calculated according to various factors including:

• The cost of wholesale energy - this is the most significant factor, accounting for about 50% of the price cap
• Network costs - this covers the cost of maintaining the infrastructure of energy systems and accounts for about 19% of the cap
• Operating costs - this covers the cost of billing and metering services, such as smart meter installation and accounts for about 12% of the cap
• Policy costs - these support the government’s environmental and social schemes to help households save energy and reduce emissions, accounting for about 9% of the cap
• VAT - this is set at 5%.

Do I have to be on a price-capped tariff?

You don’t have to be on a price-capped tariff if you don’t want to be. There are a decent amount of fixed energy deals on the market, for both new and existing customers. If you're on a variable tariff now (or if you're not sure but haven't switched for a year or more), switching to a fixed tariff will save you money.

If you're on a fixed tariff, your energy price won't change until your contract ends. So if you want to fix your energy price, it could be worth switching to a fixed tariff.

What if I’m struggling to pay my bills?

If you’re struggling to pay your bills, there may be help available from a range of sources.

Your first port of call should be your supplier. It’s in both of your interests to ensure that you’re able to manage your payments. So if there’s anything they can do to help, they are bound by Ofgem to do so.

Although there isn't currently any energy-specific government help available, there may be more general cost of living payments available to those on certain means-tested benefits.

There is also help and advice available from charities like Shelter and National Energy Action for those who need it.

Are any suppliers exempt from the price cap?

Ofgem has the right to grant exemptions from the price cap for suppliers that try to generate and supply green energy to customers. This means that they’re allowed to charge unit rates higher than the price cap on standard variable tariffs.

Ecotricity, Good Energy and Green Energy UK are the 3 suppliers who have been granted permanent exemption from the price cap.