Why Energy Price Cap Figures Don't Match

Anyone following energy coverage this summer will have seen two different figures quoted for the same thing. Some outlets reported the July price cap as £1,862 a year. Others said £1,663.

Both are correct. The difference comes from a change Ofgem made on 1 July that received far less attention than the price rise itself.

Here is what actually happened.

The cap rose by 13 per cent.

Ofgem announced on 27 May 2026 that the price cap for the period 1 July to 30 September 2026 would rise by 13 per cent for a typical household paying by direct debit.

The regulator attributed the increase to higher wholesale gas prices resulting from the ongoing conflict in the Middle East. Wholesale energy accounts for roughly 45 per cent of a typical bill under the current cap.

That increase is real and applies regardless of which headline figure is quoted.

Ofgem changed how it defines a typical household.

The price cap is expressed as an annual figure for a household using a defined amount of gas and electricity, known as Typical Domestic Consumption Values.

Those values had not been revised since October 2023, and household consumption has fallen since. On 1 July 2026 Ofgem updated them, recognising that households now use around 7 per cent less electricity and 17 per cent less gas than the previous assumption.

Because the annual figure is simply unit rates multiplied by assumed usage, reducing the assumed usage reduces the headline number without changing what anyone actually pays per unit.

That is the whole explanation. On the old consumption basis the July cap is £1,862. On the new basis it is £1,663.

Comparisons need care.

This creates a genuine problem for comparing periods, and it is worth knowing before drawing conclusions from any chart.

The April 2026 cap was £1,641 on the old basis. Comparing that against £1,663 on the new basis would suggest a modest rise, when the actual increase in unit rates was 13 per cent.

When you see a price cap figure, check which basis it uses. Ofgem's own materials set both out, and the unit rates are the figure that cannot be reframed.

The unit rates are what matter.

From 1 July to 30 September 2026, a direct debit customer on a standard variable tariff pays an average of 26.11 pence per kilowatt hour for electricity, with a daily standing charge of 57.19 pence.

For gas, the average is 7.33 pence per kilowatt hour with a daily standing charge of 29.04 pence.

Those figures are averages across England, Scotland and Wales and include VAT at 5 per cent. Rates vary by region, and the North East figure differs from the national average, so checking your own regional rate is worthwhile.

The cap is not a limit on your bill.

This is the most persistent misunderstanding about the price cap, and it causes genuine distress when bills arrive.

The cap limits what a supplier can charge per unit of energy and per day in standing charges. It does not cap the total bill.

A household using more than the typical amount will pay more than the headline figure. A large or poorly insulated home, or one with electric heating, can pay several times it.

Nobody is guaranteed to pay £1,663, or £1,862, or any other single number.

Payment method changes the figure.

Different payment methods carry different caps.

Direct debit customers are on the lowest rate. Prepayment customers face a cap of £1,620 on typical use from 1 July. Those paying by cash, cheque or quarterly direct debit face £1,795, which Ofgem attributes to the higher costs of servicing those accounts.

That means the same energy costs different amounts depending on how you pay, which has been a long-running subject of criticism.

Around 33 million accounts sit on standard variable tariffs, of which roughly 19 million pay by direct debit, 7 million by standard credit and 6 million by prepayment.

The next announcement is in August.

Ofgem reviews the cap every three months. The level for 1 October to 31 December 2026 will be announced by 26 August 2026.

The following periods will be announced by 25 November 2026 for January to March 2027, and by 23 February 2027 for April to June 2027.

Forecasters have generally suggested the October cap will remain around the current level or rise further, though wholesale markets can move quickly in either direction.

Two other changes affect bills.

From April 2026 the government removed certain levies from energy bills, including scrapping the Energy Company Obligation levy and moving some environmental costs off bills.

Separately, the government announced in July 2026 that VAT on domestic energy will be removed entirely from October, moving from 5 per cent to zero, which it estimated would save households around £45 a year.

Because the price cap figures quoted above include VAT at 5 per cent, that change will affect what customers pay from October, and Ofgem has been consulting on how the government's Bill Discount Scheme will be reflected in the cap from that point.

Check your own position.

Look at a recent bill or your online account and find the unit rates and standing charges you are actually paying, and whether you are on a fixed or variable tariff.

Submitting regular meter readings prevents estimated billing, which is a common cause of both unexpected catch-up bills and unnecessary credit balances.

Share your thoughts.

Do you know what you actually pay per unit, or just the monthly direct debit?