What the price cap actually caps (it's not your total bill)
Ofgem's energy price cap sets the maximum rate suppliers can charge per unit of electricity. From July 2026, that maximum unit rate is 26.11p/kWh. The standing charge maximum is 61p/day.
Those are rates. Not limits. Not ceilings on what you pay. If you use 5,000kWh in a year, you pay for 5,000kWh at 26.11p. If you use 10,000kWh because you heat your home with electricity, you pay for 10,000kWh. There is no ceiling on the total bill.
Ofgem quotes a "typical annual cost" of £1,862/year. That figure is calculated assuming a household uses 3,100kWh of electricity and 11,500kWh of gas. It is a benchmark for comparing tariffs, not a cap on what you will pay.
If your household uses more than 3,100kWh of electricity, your electricity costs at the cap rate will exceed the electricity component of that £1,862. This is not a loophole or an error. It is how the cap was designed to work.
What the cap does protect you from: it prevents suppliers charging 40p/kWh, 50p/kWh, or more. During the energy crisis of 2022, wholesale prices briefly implied unit rates of 70p/kWh or above if passed directly to consumers. The cap blocked that.
What the cap does not protect you from: using a lot of electricity at 26.11p. And crucially, it does not force you to pay 26.11p. Octopus Agile routinely delivers unit rates well below that.
The October 2021 to present timeline
To understand where 26.11p/kWh sits, it helps to see where unit rates have been over the past five years:
| Period | Annual cap (typical) | Context |
|---|---|---|
| Before Oct 2021 | £1,277/year | Pre-crisis baseline |
| Apr 2022 | £1,971/year | Gas supply shock begins |
| Oct 2022 | £2,500/year (govt EPG) | Government Energy Price Guarantee replaces cap |
| Jan 2023 | £3,000/year (EPG) | EPG raised as govt support reduces |
| Apr 2023 | £3,280/year (Ofgem) | EPG ends, Ofgem cap resumes at crisis level |
| Jul 2023 | £2,074/year | Wholesale prices ease |
| Oct 2023 | £1,834/year | Continued wholesale reduction |
| Jul 2026 | £1,862/year | Current cap (Ofgem confirmed) |
The current cap at £1,862/year is close to pre-crisis levels in nominal terms. In real terms, accounting for inflation since 2021, it remains significantly more expensive than energy was before the crisis.
More importantly: the cap returned to near its 2021 level because wholesale gas prices fell. If wholesale prices rise again (geopolitical disruption, cold winters, supply constraints), the cap rises with them. Ofgem reviews it quarterly.
Current rates: unit rate and standing charge from July 2026
The confirmed Ofgem price cap rates effective from July 2026:
- Electricity unit rate: 26.11p/kWh
- Electricity standing charge: 61p/day (£222.65/year)
- Typical annual electricity bill (at 3,100kWh/year usage): approximately £1,033/year electricity-only
Standing charges vary slightly by DNO region. The 61p/day figure is a national average. Some regions pay 58–60p/day; others pay 63–65p/day. The unit rate of 26.11p/kWh is consistent across Great Britain.
These are the maximum rates. A fixed-rate tariff locked in before the cap moved could be above or below. A time-of-use tariff like Octopus Agile operates entirely differently, with rates updating every 30 minutes rather than being fixed at 26.11p.
Understand exactly what the unit rate means on your bill →
Why your bill can still be higher than the "typical" figure
Even with the cap protecting you from extreme unit rates, there are several legitimate reasons a household pays significantly more than the £1,862/year benchmark:
Above-average electricity use: The benchmark assumes 3,100kWh/year. Many households use twice that.
- 3-bed house with electric heating: 8,000–12,000kWh/year
- Household with an EV: standard usage plus 2,000–4,000kWh/year for charging
- 4-bed family home, people home during the day: 5,000–6,500kWh/year
At 6,000kWh and 26.11p/kWh: (6,000 × £0.2611) + £222.65 = £1,789.25/year in electricity alone, exceeding the entire dual-fuel benchmark.
Peak-time usage: On a flat-rate tariff you pay 26.11p whenever you use electricity. But the cost pressure is always there to shift usage away from peak times when grid demand is highest.
Estimated bills and catch-up: Without a smart meter, suppliers estimate usage. An underestimated bill catches up in one large adjustment, which can feel like a sudden spike even though the usage was always there.
If you want to diagnose why your specific bill is higher than you expect, use this guide to trace the cause →.
How Ofgem sets the cap: the quarterly review
Ofgem reviews the price cap every quarter: January, April, July, and October. Each review sets the rates for the following quarter. The methodology is built around wholesale energy costs.
The cap formula takes into account:
- Wholesale electricity and gas costs (the largest component, typically 50–60% of the cap level)
- Network costs (transmission and distribution charges, set by Ofgem separately)
- Operating costs (supplier overheads, metering, billing)
- Headroom (a margin to allow suppliers to remain financially viable)
- VAT (at 5% for domestic energy)
Wholesale costs are assessed using forward contract prices in the months before each quarterly decision. If forward markets suggest electricity will be expensive in Q3, the Q3 cap will be higher. If markets suggest cheaper energy ahead, the cap falls.
This is the fundamental instability in the system. Households on the standard variable tariff at the price cap have no protection against future quarterly increases. A cold winter, a gas supply disruption, or a prolonged period of low wind generation can push the cap up within 90 days.
On Octopus Agile, this dynamic works differently. Agile unit rates track daily wholesale prices directly, with a margin. When wholesale prices spike, Agile afternoon rates spike too. But overnight and weekend rates stay low because wind generation typically does not fluctuate as dramatically. A well-timed Agile user is partially insulated from cap increases because their blended average rate stays low even when spot peaks are high.
Agile's unit rate vs the price cap: the comparison that matters
The price cap unit rate from July 2026 is 26.11p/kWh, applied at all times of day, every day. Octopus Agile prices vary in 30-minute slots, published each evening for the following day.
A typical 24-hour Agile price distribution across the year:
| Time window | Typical Agile rate range | vs cap at 26.11p |
|---|---|---|
| Overnight (11pm to 6am) | 3p to 10p/kWh | 68–88% cheaper |
| Morning shoulder (6am to 9am) | 10p to 20p/kWh | 23–62% cheaper |
| Daytime (9am to 4pm) | 12p to 22p/kWh | 0–54% cheaper |
| Evening peak (4pm to 7pm) | 25p to 45p/kWh | At or above cap |
| Evening taper (7pm to 11pm) | 15p to 28p/kWh | 0–43% cheaper |
| Negative prices | Below 0p/kWh | Octopus pays you |
The key insight: Agile is only expensive during the 4pm to 7pm weekday peak. Outside those three hours, Agile is almost always cheaper than the cap. Often dramatically cheaper.
A household that avoids running large appliances during the evening peak will blend an average rate of 10–14p/kWh across the year. That is 46–62% below the price cap unit rate.
Octopus Energy's data shows average Agile savings of £440/year versus a standard variable tariff (2023). Based on the July 2026 cap rate, the saving potential is larger because the cap rate is higher in real terms than in 2023.
Check tonight's Agile prices for your DNO region →
Read the full Octopus Agile guide to understand how to time your usage →
Why beating the cap matters: the maths over 5 years
Households treating the price cap as an unavoidable cost tend to focus on reducing usage. Households on Octopus Agile focus on timing usage. Both approaches reduce bills, but the timing approach requires no sacrifice at all.
Consider a household currently paying £1,200/year at the price cap rate:
- Electricity cost at 26.11p (annual, after standing charge): £1,200/year
- Same usage on Agile (blended 12p/kWh + standing charge): approximately £700/year
- Annual saving: £500/year
- Over 5 years: £2,500 saved
And that assumes the price cap stays flat at 26.11p for all five years. If the cap rises following a wholesale price spike (as it did in 2022 and 2023), the saving grows even larger because Agile overnight rates are anchored to off-peak wholesale prices, which tend to stay lower than peak prices even in a high-cap environment.
Add an EV to the household and the calculus changes further. Charging at overnight Agile rates of 3–8p/kWh versus the cap rate of 26.11p for an EV doing 10,000 miles/year:
- At 26.11p, 3,000kWh to charge: £783/year in electricity for the EV alone
- At 6p overnight Agile: £180/year
- EV charging saving alone: £603/year
See the full EV charging timing guide for Agile →
Over five years, a household with an EV on Agile versus the cap could save £5,000–6,000. That is a figure worth paying attention to.
The price cap protects you from the worst. Octopus Agile gets you well below it. Those are different things, and both matter.