Energy price cap could be reviewed every three months
The energy price cap, which determines gas and electricity bills for UK households, could soon be reviewed every three months.
The shake-up would ‘reflect the most up to date and accurate energy prices.’
Most homes – around 22 million – currently sit on the energy price cap, which is updated every six months.
The cap has shielded families throughout the pandemic, as it prevented companies from passing on ‘unprecedented increases’ in costs.
Energy regulator Ofgem said in a statement: ‘A more frequent price cap would reflect the most up to date and accurate energy prices and mean when prices fall from the current record highs, customers would see the benefit much sooner.
‘This change would also help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for consumers.’
The price cap was brought in two years ago to limit costs of gas and electricity but the pandemic – and increase in people working from home – caused a rethink of the proposal.
Ofgem say the change will help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for households.
Jonathan Brearley, CEO of the energy regulator, said: ‘Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone.
‘Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.’
He added: ‘The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.’
A consultation will follow and, if successful, Ofgem’s proposed changes would be implemented from October.
A government spokesperson told Metro.co.uk said the energy cap is a ‘matter for Ofgem’ and that officials ‘recognise the pressures people are facing with the cost of living.’
They added: ‘The price cap continues to insulate households from even higher global gas prices.
‘That’s why we have also outlined plans to extend the cap beyond 2023, ensuring families continue to pay lower bills than they otherwise would for their electricity and gas.’
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