By Energy cap could rise four times a year
The energy price cap could be reviewed every three months under new plans announced by the industry watchdog.
The price cap would also be “more reflective of current market prices and any price falls would be delivered more quickly to consumers,” Ofgem chief executive Jonathan Brearley said on Monday.
“It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers,” he said.
“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.”
The energy price cap is currently at a record £1,971 per year for the average household.
It is reviewed every six months and changed in October and April.
The price cap is a limit on the maximum amount suppliers can charge for each unit of gas and electricity you use, the cap has a limit on each unit of energy.
The price cap will also apply to the maximum daily standing charge for your home to be connected to the grid.
The cap does not apply to anyone on a fixed-term tariff.
Ofgem considers a range of information when deciding where the price cap should be set.
Prices that energy suppliers pay for the gas and electricity have risen.
Ofgem say by changing the cap more often, it will make it more reflective of international gas prices, taking pressure off suppliers.
The proposed changes to the cap will also allow suppliers to recover some other costs in a timely manner.
“Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone,” Mr Brearley said.
“Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.”
Ofgem said it hoped the changes could come into force in October, Households would reportedly see no impact from an update until January 1st under the plans.
