Ofgem has warned of a “very challenging winter” for UK households as it confirmed changes to the price cap review process that will allow energy bills go up and down more quickly.
The regulator currently updates its price cap twice a year – in April and October — but it will now review the price cap four times a year instead – in January, April, July and October
Ofgem said the change to when the energy price cap is updated “will go some way to provide the stability needed in the energy market, reducing the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers,” adding: “It is not in anyone’s interests for more suppliers to fail and exit the market.”
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However, what this means for households is that energy bills will rise and fall much more quickly.
Ofgem says the idea of reviewing its price cap more often is so energy companies can provide more accurate pricing for customers.
Jonathan Brearley, chief executive of Ofgem, said: “I know this situation is deeply worrying for many people. As a result of Russia’s actions, the volatility in the energy markets we experienced last winter has lasted much longer, with much higher prices than ever before.
“And that means the cost of supplying electricity and gas to homes has increased considerably.
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“The trade-offs we need to make on behalf of consumers are extremely difficult and there are simply no easy answers right now.
“Today’s changes ensure the price cap does its job, making sure customers are only paying the real cost of their energy, but also, that it can adapt to the current volatile market.”
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