Is there an energy price cap for business?

The energy price cap will drop by around 7% from April. That's about £117 lower than the current price cap - down from £1,758 to £1,641. It's the first price drop since July 2025 and only the second drop since the Energy Price Guarantee was removed in April 2024.

This will mean lower energy bills for around 19 million households in England, Wales, and Scotland that are on a variable rate tariff, at least until July, when the rate will change again. Even though the energy price cap has dropped, bills will still be around £500 a year higher than they were in 2019.

But remember, there is no price cap on business energy, so this will not affect non-domestic energy bills. 

This means that whether you run a café, hair salon, manufacturing site or office, your business gas and electricity prices are set by your contract and usage, not by the Ofgem price cap that protects households.

Unlike domestic energy customers, businesses receive no government support for their energy bills. Although the Energy Bill Relief Scheme and Energy Bills Discount Scheme were introduced to help businesses during the height of the energy price crisis, no further government support has been given since these schemes ended in March 2024.

With no live support schemes or cap in place, it is even more important for SMEs to compare business energy quotes regularly and avoid rolling onto expensive deemed or out-of-contract rates.

Below, there's more on how both schemes worked, but let's first look at how the energy price cap works and whether it affects business energy prices.

Five-point summary on the energy price cap and your business

• The Ofgem energy price cap only applies to domestic customers on standard variable or prepayment tariffs – there is currently no business energy price cap for UK SMEs.
• Business energy prices are driven by wholesale costs and individual contract terms, so your bills can rise or fall independently of the household price cap.
• Past support schemes – the Energy Bill Relief Scheme (EBRS) and Energy Bills Discount Scheme (EBDS) – have now ended, so there is no ongoing government cap or discount on non-domestic energy rates.
• The household price cap can act as a useful indicator of wider wholesale trends, but the only way to protect your business is to fix your energy rates on a competitive commercial contract.
• Shopping around and using an expert broker like Bionic can help your business secure better rates, manage risk and avoid expensive out-of-contract or deemed tariffs.

What is the energy price cap?

The energy price cap sets the maximum price that energy suppliers can charge domestic customers on prepayment and standard variable tariffs. 

The cap is reviewed and set every three months by Ofgem, the UK energy regulator. It factors in changes to wholesale energy prices, policy, network and operating costs, and prepayment meter costs.

Although usually described as the annual bill an average household on a dual fuel tariff would pay, the cap is actually a limit on the standing charge and unit rates. This means that household bills will be higher or lower than the advertised cap, depending on how much energy they use.

This means that, crucially, the cap does not limit the total amount a home can be billed – if you use more units of gas or electricity than the “typical” consumption used to set the cap, you will pay more than the quoted annual figure.

Because the business energy market works differently – with bespoke contracts, higher usage and varied meter types – Ofgem has not extended the price cap to non-domestic customers.

What is the current energy price cap level?

Until March 31, 2026, the energy price cap per unit and the standing charge will be:

• Electricity - 27.69 per kWh (unit rate) and 54.75p per day (standing charge)
• Gas - 5.93p per kWh (unit rate) and 35.09p per day (standing charge)

From April 1, 2026, to June 30, 2026, the new rates below will apply:

• Electricity - 24.67 per kWh (unit rate) and 57.21p per day (standing charge)
• Gas - 5.74p per kWh (unit rate) and 29.09p per day (standing charge)

When prices are adjusted for annual consumption, this means an average household on a standard variable tariff paying by Direct Debit can expect to pay £1,641 a year for gas and electricity. This is a £117 decrease on the previous cap.

Remember, these headline annual figures apply to a “typical” domestic customer using a set amount of energy each year - your home bills will be higher or lower depending on property size, insulation, heating type and how efficiently you use energy.

Will the energy price cap increase?

The price cap increased by 2% from October 1, 2025 and then again by 0.2% from January 2026. But this latest announcement is the first significant drop since July 2025.

So, why the big drop this time around?

It's largely down to policy measures announced in November's Autumn Budget, including:

• Renewables Obligation - 75% of this cost has been shifted from household energy bills into general taxation. 
• Energy Company Obligation (ECO) - This UK government scheme was introduced to ensure larger energy suppliers fund energy efficiency improvements for low-income, fuel-poor, and vulnerable households. This will not be extended beyond March 2026.
• A drop in wholesale energy prices has also contributed.

Speaking to BBC Radio 4's Today program, Kate Mulvany, Principal Consultant at Cornwall Insight, explained why the cap has dropped: “Overall, the price for this typical household is coming down by 7% to around £1,641. 

"The reason we talk about this typical household is because the amount everyone pays will depend on the amount of electricity and gas they actually use, how energy efficient their house is, and maybe some people have got electric vehicles they charge.

"So this typical figure is used as an average so people can get a sense of whether bills are going up or down and whether it's substantial or a little bit.

“This quarter from April is slightly different to normal movement. Generally, when we talk about the price cap, that doesn't reflect what people are paying for the duration of a fixed-term agreement. But this time the government made a decision to take some of the costs out of individuals' bills and instead put them into genral taxation. And they are expecting that to be reflected in fixed-price bills as well in [the bills of] people who are following the price cap.

"The energy suppliers who send out the bills will be communicating this.

"The biggest change is that government-led announcement about renewable generation support and energy-efficiency measures - some of that moving into general taxation. But we have also seen a fall, for this typical household - I think it's around £40 - of the reduction is down to the wholesale energy cost coming down. 

"And that's reflective of global prices, largely. In the same way that it was global prices pushing them up when we saw those really high prices around 2022 and 2023."

Wholesale energy costs still make up the largest portion of your energy bill, so the price you pay is still open to volatile prices. 

The wholesale price is the amount suppliers pay for the energy they provide to homes and businesses. Ofgem figures show wholesale gas and electricity prices dropped steadily towards the end of 2025. There are more details in our guide to business energy price rises.

The way the energy market works also contributes to rising prices. Although many suppliers utilise renewable sources, the price of electricity is directly influenced by the price of gas. We explain why in our guide on how energy is bought and sold in the UK.

For business owners, this means your renewal quotes will still reflect underlying wholesale market movements even when the household price cap is falling, staying flat or rising more slowly.

As the price cap only affects domestic energy rates, fixing your business energy rates is the only way to protect against price volatility. Our main business energy page has a breakdown of this month's business energy prices.

Speaking to BBC Radio 4 following a previous price cap announcement, Tim Jarvis, Director General for Markets at Ofgem, recommended that consumers should switch from standard variable rate tariffs to fixed rate tariffs to save money: "We are starting to see the market returning, which is very much welcome, and I would very much urge people to shop around. We're seeing fixed-rate deals on the market now that are around £200 a year cheaper than the cap.

"Our advice to people would be to look at the fixed market because it does insulate you from this volatility and fluctuations in the price cap, and ensure that you know what you're paying. The price cap is a cap on rates and what suppliers can charge, but there are cheaper deals out there."

When is the next energy price cap review?

The energy price cap is reviewed every three months - February, May, August, and November. The new price cap is also implemented every three months - April, July, October, and January. According to Ofgem, the next round of price cap reviews will take place on the following dates:

• May 27, 2026 - period July 1, 2026 to September 30, 2026
• August 26, 2026 - period October 1, 2026, to December 31, 2026
• November 25, 2026 - period January 1,  2027 to March 31, 2027

These quarterly review points are useful markers for business owners to watch, as they can give a rough indication of where wholesale prices – and therefore future business contract offers – may be heading. Though the level of the price cap has no impact on non-domestic energy rates.

What is the business energy price cap?

There is no business energy price cap. The complexity of commercial energy contracts and the difference in usage between businesses mean that a cap on business energy rates would be difficult to set up.  

Unlike households, where most use gas and electricity for the same things but at different levels, the difference in how and when businesses use energy can be huge. 

Although a fish and chip shop and a car mechanic both need electricity, how and when they use this power is completely different. This is why there are no ‘off-the-shelf’ options for businesses and contracts need to be tailored to meet individual needs.    

This makes it more difficult to create a single blanket rate across all businesses, so there is no commercial energy price cap. 

In practice, this also means that business electricity and gas contracts can run for longer fixed terms – typically between 1 and 5 years, depending on your usage and risk appetite.

Without a cap, non-domestic customers rolling onto deemed, default or out-of-contract tariffs can face significantly higher prices than those who negotiate a new fixed deal before their renewal date.

When the government did offer support, schemes were designed to reflect the complexity of commercial energy contracts. This meant financial support was offered to all sizes and types of businesses. 

These schemes were time-limited and applied automatically via suppliers, so there is currently no need – and no option – for SMEs to apply for new government energy discounts.

Do we need a cap on energy rates? 

Wholesale energy prices have been so volatile in recent years that households and businesses across the UK have been hit with record energy bills. A price cap is one way to help lower the amount customers pay for energy. But it’s not perfect. 

The energy price cap was introduced in 2019 to limit the amount suppliers could charge households on credit meters for gas and electricity. This came two years after the Safeguard Tariff, which caps the unit rate suppliers can charge anyone paying for gas or electricity in advance using a prepayment meter. 

The cap was brought in to end what (then Prime Minister) Theresa May described as “rip-off energy prices” that were being charged as a result of Britain’s “broken energy market”. 

Although it does help to control prices, the problem with this system is that it causes prices to bunch around the level of the cap. When the cap was introduced, the number of cheap energy deals (those that cost less than £1,000 per year) dropped by 90% during 2018, falling from 77 at the start of the year to just eight by the end. 

This made the domestic market a lot less competitive. The price cap was even cited as one of several reasons why some energy suppliers went bust or stopped trading over the last few years.  

For the business market, a similar cap could reduce the number of specialist suppliers and innovative tariffs available to SMEs, while still not fully protecting high-usage or energy‑intensive organisations from fluctuations in wholesale costs.

How has the energy price cap changed?

There have been many changes to the level of the energy price cap since it was introduced in 2019. It was originally updated every six months, but market volatility saw Ofgem switch to quarterly updates from the start of 2023.

It's also worth noting that, during the 2022–2023 crisis period, the Energy Price Guarantee effectively overrode the cap level for households by limiting typical annual bills, while non-domestic customers relied on EBRS and then EBDS rather than a unit-rate cap. There's more info on those schemes below.

^{Note: Energy Price Cap levels above are based upon an average household paying a supplier's standard variable rate tariff by monthly Direct Debit.
*Although the price cap appeared to have dropped by £53, the actual reduction was just £17 due to a change in the way Ofgem calculates 'typical' household use. 
**A volatile energy market meant the Energy Price Guarantee was introduced alongside the Energy Price Cap. This ended in March 2024.}

What was the Energy Price Guarantee?

The Energy Price Guarantee was a government scheme that limited the price of gas and electricity for domestic consumers in the UK. It was in place from October 2022 to March 2024. 

It is often cited as capping household energy at £2,500 a year, but this figure was based on an average household paying by Direct Debit. The actual capped rates were 34.00p per unit of electricity rates at 10.30p per unit of gas rates at 10.30p per kWh. Standing charges were also capped at 46.35p for electricity and 28.49p for gas. This means that bills were higher or lower than the quoted £2,500, depending on energy usage and payment methods (paying by Direct Debit is usually the cheapest option). 

What was the Energy Bill Relief Scheme? 

The Energy Bill Relief Scheme (EBRS) is now closed. The Energy Bill Relief Scheme was a discount on business energy bills that ran for six months between October 1, 2022, and March 31, 2023. EBRS worked differently from a price cap. Instead of capping rates, the government limited the wholesale price that suppliers pay to generators for energy. 

The savings made by suppliers were passed on to consumers by a cut in the wholesale cost part of the unit rate on all business energy contracts signed after December 1, 2021. The discount was also applied to businesses on flexible, out-of-contract, and deemed rates.

What businesses were eligible for the Energy Bill Relief Scheme? 

The Energy Bill Relief Scheme was applied to all non-domestic contracts. This means it was open to all businesses, including voluntary and public sector organisations. 

There were some exceptions, such as power stations, grid-level battery storage facilities, or any business that uses gas or electricity to generate power that will be sold back to the grid. 

The only other condition was that all eligible businesses were on one of the following contracts: 

• An existing fixed price contract agreed on or after December 1, 2021. This includes contracts signed while the scheme is running. 
• Deemed rates, out-of-contract rates, or a variable tariff 
• Flexible purchase or a similar contract 

Check out our guide for more information on the available types of business energy contracts. 

What was the Energy Bills Discount Scheme (EBDS)? 

The Energy Bills Discount Scheme (EBDS) replaced the Energy Bill Relief Scheme (EBRS) on April 1, 2023. The new scheme offered a discount on non-domestic gas and electricity unit rates. The unit rate is measured in kilowatt-hours (kWh) and is the amount your business pays for each unit of energy it uses.

Who was eligible for EBDS?

EBDS was available to non-domestic customers on fixed-price contracts that were agreed on or after December 1, 2021, as well as deemed and out-of-contract rates. 

What to do if you can’t pay your business energy bills

If you're struggling to pay your business energy bills, then you should contact your supplier as soon as possible. Under Ofgem rules, the supplier must offer a reasonably affordable payment plan. You can find out more in our guide to business energy bills.

Should you fix your business energy rates? 

Although we can't predict what will happen to energy prices, fixing your rates is the only way to guarantee bill stability by locking in a consistent price for your energy and the current discount. 

Tim Jarvis, Director General of Markets, at Ofgem, echoed this when speaking on BBC Radio 4, "Prices are still high compared to historical norms. There’s a lot of volatility. The changes in prices are as a result of the changes in international markets. It does make this market difficult, so I would recommend people try and switch to protect themselves from these fluctuations.”

That’s where the tech-enabled experts at Bionic can help. We’ll compare rates from a panel of trusted UK suppliers to get our best available fixed rates for your business. If you need to fix your rates, head to our Business Energy page to start your price comparison.