What is the ‘Price Cap Trap’?

The energy price cap was introduced to protect customers from paying extremely high energy prices. But what many people don’t realise is that it can sometimes make switching suppliers look less worthwhile than it actually is. This is known as the ‘Price Cap Trap’.

Here’s what it means and why it matters.

What is the energy price cap?

The energy price cap is a limit on how much suppliers can charge for each unit of gas and electricity you use if you’re on a standard variable or default tariff.

One of the biggest misconceptions is that the price cap limits your energy bill. It doesn’t. It only limits the price per unit of energy. So, the more energy you use, the more you’ll still pay.

Learn more about the latest energy price cap

How is the price cap set?

The price cap is set by Ofgem, the UK’s energy regulator, and is reviewed every three months.

To work out the cap, Ofgem looks at how much it has cost suppliers to buy energy in the previous few months. If wholesale energy prices fall, the price cap is likely to fall too. If they rise, the cap usually increases.

We’ve seen exactly that over the last few years. Following the COVID-19 pandemic, Brexit and the war in Ukraine, wholesale energy prices rose dramatically, leading to the cost of living crisis.

More recently, from 1 July 2026, the price cap increased by 13%, something that’s highly unusual during the summer months, largely due to increased tensions in the Middle East affecting wholesale energy markets.

So, what’s the ‘Price Cap Trap’?

This is where things can get confusing.

Many people assume that because they’re protected by the price cap, they’re already on the cheapest tariff available. Unfortunately, that’s not always true.

The price cap simply limits how much suppliers can charge customers on default tariffs. It doesn’t mean it’s the best deal.

In fact, some fixed tariffs are now available below the current price cap, meaning switching supplier could save you money and protect you from future price rises.

Of course, it’s always worth checking the details of any tariff first, including how long the price is fixed for and whether there are any exit fees.

Check out our blog on ‘Is Now a Good Time to Fix your Tariff?’

Are you on a default tariff?

If you’re on a standard variable or default tariff, there’s a good chance you’re paying more than you need to.

Even if switching only saves you £50 or £100 a year, that’s still money back in your pocket. And with the next price cap review due in October, waiting could end up costing even more.

If you’re not sure what tariff you’re on, now is a great time to check and compare your options. It could be one of the easiest ways to reduce your energy bills.

Get Help Today With Fixing Your Tariff and Finding the Best Energy Deal

If you’re worried you might be paying too much for your energy, you don’t have to figure it out on your own.

We’re proud to deliver the LEAP service in partnership with Peterborough City Council, South Cambridgeshire Council, and Rutland County Council.

LEAP is a completely free energy advice service, helping you save money on your energy bills.

By having a free home energy visit, one of our friendly Home Energy Advisors can review your current tariff, explain your options, and help you decide whether switching supplier or fixing your tariff could save you money. They’ll also give you personalised energy-saving advice, install free energy-saving measures where appropriate, and check whether you’re eligible for additional support, such as the LEAP Appliance Scheme or other grants.

If you live in Peterborough, South Cambridgeshire or Rutland and think you may be eligible, book your free home energy visit today and let us help you find the best energy deal for your home.