The UK’s energy price cap is up for review this week, with an announcement expected Wednesday. 

The cap limits the amount that providers can charge per kilowatt-hour of domestic electricity and unit of gas, as well as the daily standing charge they can levy. It’s decided by Ofgem, the energy regulator. 

Currently the cap sits at £1,641 per year (have a read of the FAQs below to find out why that’s a useful-but-actually-nonsense number), but experts reckon the announcement could see a rise of around 13% to £1,850.

America’s attack on Iran has seen wholesale energy costs rise, because of a reduced supply of the raw materials for generation. A summer price rise has a less severe impact because of reduced consumption, but all eyes will be on what Ofgem will decide for the autumn price cap level.  

How does the price cap work?

The total amount of the price cap – set at £1,641 per year for the period between April and June – is based on an average household consumption. That is, a typical household with both gas and electricity paying by direct debit. 

When is the cap reviewed? 

There are four reviews scheduled in each year, taking place in January, April, July and October. They are typically announced a month or two in advance so that energy providers have time to prepare. 

Why is my bill different to the cap? 

Where you live can make a difference (standing charges are set for each different region of the UK based on a range of criteria), as does how you pay, what fuel you use and whether you’re an average of every household in the UK.

Ofgem has what it calls a ‘typical domestic consumption value’, that takes values from different parts of the energy market to create a value for an average home – it’s intended as a handy reference rather than an energy price gospel. 

How is the cap calculated? 

Ofgem has to decide the price of energy based on the wholesale cost of making the electricity, a bit of money that’s put aside to maintain and upgrade the infrastructure and cover government policies like the warm homes discount, as well as allowing for a bit of profit for the suppliers themselves.