Energy bills could rise four times a year under the new Ofgem plan

The price cap on household energy bills could be reviewed four times a year under new plans discussed by Ofgem on Monday.

The energy regulator said it could introduce two new reviews a year, one in January and another in July.

It would help pass on savings from a possible drop in gas prices to customers more quickly, Ofgem said, and also protect stressed utilities from damage from the cap.

“Today’s proposed change would mean that the price cap would better reflect current market prices and any price decreases would be passed through to consumers more quickly,” said Jonathan Brearley, Chief Executive of Ofgem.

“It would also help energy suppliers better predict how much energy to buy for their customers and reduce the risk of further supplier failures, ultimately driving up costs to consumers.

“The last year has shown that we need to make changes to the price cap to enable suppliers to better manage risks in these unprecedented market conditions.”

After consultation, Ofgem hopes the changes can come into effect from October, meaning the first change under the new system will be made in January.

The energy price cap – currently at a record £1,971 a year for the average household – is reviewed every six months and changed in October and April.

Ofgem takes a range of information into account when deciding where the price cap should be set. The price that energy suppliers pay for gas and electricity plays a major part in this.

In the past year, gas prices have risen so much that the price cap has often forced suppliers to sell the gas for less than they bought it.

More to come… Energy bills could rise four times a year under the new Ofgem plan

Bobby Allyn

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