Is there a business energy price cap?

Many business owners assume their energy is protected by the same price cap they hear about for homes. It isn’t. This guide explains why, what the household cap is right now, what government support businesses had during the 2022 energy crisis, and which rules protect business customers today.

Is there a price cap on business energy?

No. There is no price cap on business gas or electricity. Ofgem states plainly that you are not protected by the price cap if you have a business energy contract.

What you pay is set by your supplier and fixed by the contract you agree: your unit rates, standing charges and contract length. That is why the timing of your renewal and the type of contract you choose matter so much. See our guide to fixed and flexible contracts.

Why doesn’t the price cap cover businesses?

The price cap was created by the Domestic Gas and Electricity (Tariff Cap) Act 2018, which applies to household standard variable and default tariffs. Business contracts are outside its scope.

The cap is a formula for household tariffs. Ofgem builds it from the costs of buying energy on the wholesale market, network costs for the pipes and wires, government social and environmental schemes, suppliers’ day-to-day running costs, an allowance for profit and risk, and VAT. Even household customers lose the protection once they agree a fixed tariff: Ofgem says the cap only protects people on tariffs where the unit rate can go up or down with the market.

Ofgem’s rules for business customers work differently. Its Standards of Conduct require suppliers to treat business customers fairly, but the licence says those standards do not apply to the amount of any charges, apart from matters relating to deemed contracts. In other words, Ofgem regulates how suppliers behave towards businesses, not the prices they agree.

What is the household price cap right now?

From 1 October to 31 December 2026, the household price cap is £1,723 a year. Ofgem says this figure is based on the average unit rate and standing charge for people who pay by Direct Debit in England, Scotland and Wales.

Household cap, 1 October to 31 December 2026 (Direct Debit, GB average)	Unit rate	Daily standing charge
Electricity	26.32p per kWh	54.83p
Gas	7.97p per kWh	29.68p

A few points to bear in mind:

• Ofgem sets the cap every 3 months.
• It limits the unit rate and standing charge together, not your total bill.
• Ofgem notes there is no VAT on household electricity from 1 October 2026 to 31 March 2027.

Comparing these figures with a business bill is not like for like. Most business energy carries VAT at 20% and the Climate Change Levy, while household energy gets a reduced rate of VAT and is excluded from the levy. For current average business prices, see our business energy prices page, which updates when new government figures are published.

Does the price cap cover you if you work from home?

If you run your business from home on your normal household energy supply, your home tariff is treated like any other household tariff. The cap applies if you are on a standard variable tariff, and not if you have fixed your home tariff. It is the type of contract that matters, not what you use the energy for.

If you are VAT-registered, you may be able to reclaim the business share of the VAT on your home energy. GOV.UK gives the example of someone whose home office takes up 20% of the floor space reclaiming 20% of the VAT on their utility bills.

If your premises has a business energy contract, for example a shop with a flat above it supplied on a business contract, the cap does not apply, even to the domestic part. That supply may still qualify for a reduced rate of VAT on the domestic share. Our VAT on business energy guide explains the 60% rule for mixed use.

What help did businesses get with energy bills in 2022 to 2024?

Businesses have never had a price cap, but during the energy crisis the government ran two temporary discount schemes. Both have closed.

Energy Bill Relief Scheme (1 October 2022 to 31 March 2023)

The Energy Bill Relief Scheme covered businesses, charities, schools, hospitals, care homes and other non-domestic customers on fixed contracts agreed after 1 December 2021, or on variable tariffs. It set government-supported wholesale prices of £211 per MWh for electricity and £75 per MWh for gas, and suppliers applied the discount to bills automatically. A matching scheme ran in Northern Ireland.

Energy Bills Discount Scheme (1 April 2023 to 31 March 2024)

The Energy Bills Discount Scheme replaced it with a smaller discount for 12 months:

	Maximum discount	Price threshold
Electricity	£19.61 per MWh	£302 per MWh
Gas	£6.97 per MWh	£107 per MWh

Energy and trade intensive industries could apply for a higher level of support. The standard discount was applied automatically by suppliers.

GOV.UK withdrew the guidance for both schemes on 10 April 2024. Neither scheme capped prices: both gave discounts on energy costs for a fixed period.

What protects business energy customers instead?

Without a cap, business customers rely on contract terms and a set of Ofgem and government rules.

Rules for all business customers

• Fair treatment. Since 1 July 2024, Ofgem’s Standards of Conduct apply to businesses of every size, giving Ofgem powers to act against suppliers that don’t treat business customers fairly.
• Deemed contract terms. Suppliers must take all reasonable steps to make sure the terms of their deemed contracts are not unduly onerous. One sign of unduly onerous terms is revenue that significantly exceeds the supplier’s costs of supply. See our deemed contracts guide.
• Broker fee disclosure. For contracts signed on or after 1 October 2024, principal terms must clearly show any broker fees.

Extra rules for microbusinesses

• renewal information around 60 days before a fixed term ends
• no notice needed to leave at the end of a fixed term
• rollovers limited to 12 months, and no termination fees on rollover, evergreen or out-of-contract supply
• a 12-month limit on back-billing

Our microbusiness energy guide explains each of these and who qualifies.

Help when things go wrong

Microbusinesses, and since 19 December 2024 small businesses, can take unresolved complaints to the Energy Ombudsman for free. Suppliers must also tell small business customers each year that Citizens Advice can help.

Lower tax for qualifying use

Low-usage sites, charities using energy for non-business activities and domestic use get a reduced rate of VAT and are excluded from the Climate Change Levy. Qualifying electricity in Great Britain is zero-rated from 1 October 2026 to 31 March 2027. See our VAT on business energy guide.

How can you protect your business from price rises?

• Know your contract end date. For microbusinesses it must be shown on every bill. Put a reminder in your diary well before it.
• Avoid falling out of contract. If your contract ends with nothing new agreed, you move onto out-of-contract rates set by your supplier rather than a price you negotiated.
• Compare before you renew. Our contract renewal guide explains when and how to start.
• Choose the right contract type. A fixed contract gives price certainty for its term. Our fixed vs flexible guide explains the alternatives.
• Check you are paying the right tax. A low-usage site should not be paying 20% VAT or the Climate Change Levy.

Frequently asked questions