Every quarter, headlines announce the new UK energy price cap as a single annual figure. That figure is not your bill. It's an illustration based on a "typical" household. Here's what the cap actually limits and how to work out your own cost.
What the cap is
Ofgem, the UK energy regulator, sets a cap on:
- The unit rate (pence per kWh) for electricity and gas
- The standing charge (pence per day) for each
…for customers on default / standard variable tariffs. It varies by region and payment method.
It does not cap total spend. Use more, pay more.
Calculate your own bill
annual cost = (annual kWh × unit rate) + (365 × standing charge)
Do it separately for electricity and gas, then add VAT if your rates are quoted without it. Domestic energy VAT in the UK is at the reduced rate.
Illustrative example (not current rates):
| Electricity | Gas | |
|---|---|---|
| Annual use | 2,700 kWh | 11,500 kWh |
| Unit rate | 25p/kWh | 6p/kWh |
| Standing charge | 50p/day | 30p/day |
| Usage cost | £675 | £690 |
| Standing charges | £182.50 | £109.50 |
| Total | £857.50 | £799.50 |
Get your annual kWh from your bill or supplier app, and the current rates from Ofgem or your supplier.
For individual appliances, use my Electricity Cost calculator.
Standing charges matter more than people think
For low-use households, flats, and single people, standing charges can be a large share of the bill, and you can't reduce them by using less.
Capped vs fixed tariffs
- Capped (variable): rates move with each quarterly cap.
- Fixed: rates locked for a term, sometimes above, sometimes below the cap. Check exit fees.
Compare the fixed rate against the expected cap over the same period (forecasts are published by energy consultancies, but treat them as estimates).
Reducing your bill
- Heating is usually the biggest lever. See Heat Pump Running Costs.
- Time-of-use tariffs if you have an EV or can shift load (EV charging).
- Insulation and draught-proofing before expensive upgrades.