Looking for info on the July 2026 price cap? Prices are on the rise, so you may be wondering whether it's time to lock in a fixed rate. Read our full guide to the July price cap to see if switching is right for you. Otherwise, keep reading below to learn exactly how the price cap works.
The price cap is set by Ofgem, the energy regulator. Despite the name, it does not limit your total bill and it does not apply to all tariffs. If you're on a "default" or "standard variable" tariff, it actually puts a cap on:
the maximum amount a supplier can charge you for each unit of gas and electricity you use
the daily standing charge (the fixed cost to connect your home to the grid).
Think of it like this: if there were a price cap for milk, it would limit the cost of each bottle, but if you bought more bottles, you’d still pay more. Read more on Ofgem's website.
That figure is just an illustration. To get that number, Ofgem takes the capped unit prices and standing charges, and multiplies them by the exact number of units they estimate a "typical" household in an "average" part of the country uses in a year. Then that's the figure that gets reported everywhere. But it can actually be pretty inaccurate if you use much less or much more energy than the "typical" home.
To continue our milk analogy, if The Daily Moos reported that the price cap on milk had gone up from £70 to £80, it would just mean that Tesco was allowed to charge more for each bottle so the average family would spend more.
Yes! The cap on standing charges and unit rates both vary depending on where you live. This is because of things like how many people live in your area and how much work is needed on the energy network there.
They also vary depending on as couple of other things, including how you pay your bill (we know, this is all quite complicated!). Basically, it's a bit cheaper if you pay by direct debit because the supplier doesn't have to do so much work. You can check price cap rates for your area and payment method on Ofgem's website.
Every now and then, Ofgem adjusts its estimate of what "typical" usage actually is (for example, for the July 2026 cap it reduced a bit for electricity and quite a lot for gas). It says this is because homes are becoming more energy-efficient and people are naturally cutting back.
This means you might see websites report that a price cap has "fallen", simply because Ofgem is now assuming you will use less energy — even though the actual price per unit went up.
Still with us? Back to dairy: "Ofmilk" might claim the price cap has dropped from £80 to £70 (even though the price per bottle has risen) because they think people need less calcium these days and will buy fewer bottles.
To truly see if your energy is getting cheaper, you should always compare the old and new caps using the exact same usage figures.