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Ofgem proposes energy price cap review every three months

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Ofgem proposes energy price cap review every three months

T

he energy price cap could be reviewed every three months instead of twice a year as bills continue to soar, the industry regulator announced on Monday.

The cap, which outlines the maximum amount companies can charge for energy, has been credited with protecting households from the worst of the hikes after pandemic restrictions were eased and the war in Ukraine pushed up wholesale gas prices.

Average bills rose by almost £700 a year last month and are forecast to rise to more than £2,600 a year in October when the cap is next reviewed.

The regulator has argued that reviewing the cap twice a year contributed to the collapse of several energy companies when wholesale gas prices rose significantly.

Jonathan Brearley, chief executive of Ofgem, said adjusting the cap more regularly would reflect the most accurate energy prices and mean when costs fall from the current record highs, customers would see the benefit much sooner.

Mr Brearley added: “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.

“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.”

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