What Does the New Energy Price Cap Mean for Business Energy Prices?

What is the current energy price cap?

The current Ofgem price cap runs from 1 April to 30 June 2026, at £1,649 per year for a typical household based on standard consumption figures, or £1,472 using Ofgem's updated Typical Domestic Consumption Values (TDCVs).

From 1 July 2026, the cap rises by 13% to £1,862 per year (or £1,663 under updated TDCVs), driven primarily by higher wholesale gas prices. Source: Ofgem.

The next review covers October to December 2026.

Source: Ofgem. Annual figures based on a typical domestic household. Unit rates are based on Direct Debit payments and include VAT. Business energy unit rates are agreed directly with suppliers and will differ. View the full breakdown on Ofgem's website.

The gas unit rate increase is the one worth paying attention to. A 27.7% rise from one quarter to the next reflects a significant jump in wholesale gas prices in global markets. Electricity is up too, but by a more modest 5.8%. Standing charges on both fuels are broadly flat.

These are domestic rates, so they won't match what you're paying directly. But they're drawn from the same wholesale market your supplier buys from. When input costs move this sharply, business quotes at renewal tend to follow, particularly for gas-heavy operations like manufacturers, hospitality businesses, or anyone running commercial heating or kitchen equipment.

Check Business Energy Prices

What is the energy price cap?

The energy price cap is set by Ofgem, the UK's energy regulator. It limits the maximum unit rates and standing charges that suppliers can apply to domestic customers on standard variable or default tariffs.

It was introduced in January 2019 to protect households from being overcharged when they're not on a fixed deal. The cap doesn't limit total bills. A household using more energy than the typical amount will still pay more than the capped figure.

Ofgem reviews the cap every three months, adjusting it to reflect changes in wholesale energy costs, network charges, operating costs, and government policy levies.

Does the energy price cap apply to businesses?

No. The energy price cap applies to domestic customers on default or standard variable tariffs. Business energy contracts aren't covered.

Most businesses agree fixed-term or bespoke contracts directly with suppliers. There's no equivalent Ofgem price cap for business energy, and there hasn't been since the government's Energy Bill Relief Scheme and Business Energy Support Scheme ended in March and April 2023, respectively.

That said, the cap isn't irrelevant to you. The wholesale market movements that drive cap changes are the same forces that influence what you're quoted when your contract comes up for renewal or you switch suppliers. So when the cap rises sharply, it's often a signal that business prices are under pressure too.

What drives changes to the energy price cap?

Wholesale energy costs are the single biggest factor. According to Ofgem's own breakdown, wholesale costs account for around 42.8% of the total cost included in the cap. The remaining components are:

When wholesale gas prices rise, as they have through mid-2026 due to global market conditions, this feeds through directly into a higher cap. Network and policy costs tend to be more stable, though they can shift with infrastructure spending and government decisions.

What does the price cap mean for business energy costs?

The cap doesn't set your prices. But as the unit rate figures above show, the wholesale market behind it is moving significantly, particularly on gas. That tends to flow through into business quotes at renewal.

If your contract is coming up in the next six months, it's worth comparing sooner rather than later. Market conditions can shift quickly, and the quote available today may look different from the one available when your contract actually ends.

Compare your business energy options across a panel of suppliers, or look specifically at business electricity and business gas separately.

How can businesses manage energy costs when prices are rising?

A few approaches are worth considering, and none of them requires specialist knowledge.

Compare at renewal and before it. Prices vary between suppliers even in a high-price market. Comparing across a panel of suppliers gives you a clearer picture of what's available, rather than just accepting whatever your current supplier offers.

Consider a fixed-rate contract. Locking in a rate when wholesale prices are stable can protect you from future rises. It also makes budgeting simpler. The trade-off is less flexibility if prices fall. Take a look at your business electricity options or business gas contracts to see what's on the market.

Review your usage. Reducing consumption is the one lever that works regardless of what the market does. Even modest efficiency improvements can offset higher unit rates.

There's no single right answer. The best approach depends on your usage, your appetite for price certainty, and when your current deal ends. What helps is having a clear picture of your options before you need to make a decision.

Check Business Energy Prices