The energy bills of more than 22 million British households will change every three months and not every six months from October, in line with proposals to adjust the country’s energy price ceiling released on Monday.
Regulator Ofgem argued that quarterly reviews, rather than twice a year, would cause consumers to see the “benefit much sooner” when wholesale gas and electricity prices start to fall from their peak highs.
However, the change will also mean that any further increases in wholesale prices will pass to households much faster.
The price cap, which was introduced in 2019 to protect households not looking for fixed-price transactions, is currently updated twice a year, in April and October.
This means that households were protected from the worst volatility in the wholesale market in late 2021 and early this year, as these price increases were only passed in April, when energy consumption began to decline. The quota dictates the energy bills to more than 22 million households.
Ofgem hopes to bring the changes from October, subject to consultation.
The regulator claimed that the changes would also help energy suppliers, who have long complained about how the price ceiling is calculated. Several of them, including Bulb, a UK group forced to shell out £ 2.2 billion in taxpayer money, said the price cap was among the reasons for its failure.
“The past year has shown that we need to make price cap changes so that suppliers are more able to manage risks in these unprecedented market conditions,” said Ofgem CEO Jonathan Berrley.
The government said setting the price cap was a “matter for Ofgem” but added: “The price cap continues to isolate households from even higher global gas prices.”
Ofgem proposes more frequent changes to UK energy price cap Source link Ofgem proposes more frequent changes to UK energy price cap