Ofgem weighs more frequent price cap updates to benefit UK consumers
Ofgem has announced that it will publish a ‘minded-to’ consultation to look at whether the energy price cap should be updated quarterly rather than every six months.
The aim of the updated frequency would be to enable a fairer and more resilient market, stated the British electricity and natural gas markets regulator.
A more frequent price cap would reportedly reflect the most up to date and accurate energy prices. When prices fall from the current record highs, customers would see the benefit much sooner, according to Ofgem.
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Jonathan Brearley, CEO of Ofgem, announced the proposal in a statement: “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.
“Today’s proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers. 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.
According to Ofgem, high prices and market volatility have been straining the sector. Their proposed changes would enable suppliers to recover costs and deliver better outcomes.
Brearley added: “The challenges that our customers face today should be a call to action for energy retailers to improve things, both in the way they do business to ensure it is resilient and in the way they treat customers.”
Ofgem will launch a consultation on the plan, which will be open until 14 June 2022. Their hope is to implement the reforms from October 2022.
Should a quarterly review be adopted it will be put in place from January 2023.
