New Ofgem plans could see energy price cap reviews four times a year

By tadmin  | Date: 2022-05-17

New Ofgem plans could see energy price cap reviews four times a year

Ofgem, the UK government energy regulator, has recently revealed its intention to insert two more household energy bill price cap reviews in January and July per year under its new reform plans.

Supposedly, the reform plans are intended to allow the price cap review on residential energy bills every three months. The initiative would reportedly help pass on savings, created from a potential drop in gas prices, to customers more quickly. In addition, it would also protect the nation’s under-pressure energy suppliers from damages caused the price cap.

The energy price cap, which is currently set at around $2,432.5 (£1,971) for the average household per year, is reviewed every six months and is changed in April and October.

For those unversed, energy prices for nearly 23 million households across Great Britain are decided by the cap. This means that any changes in the price cap could assert a sizable economic impact across the country.

According to Jonathan Brearley, Ofgem’s Chief Executive, the recently proposed change is expected to help suppliers predict the amount of energy required to purchase for customers, lowering the risks of supplier failures that ultimately push up the costs for customers.

For the record, Ofgem is planning to put the new reform, or change to quarterly price caps on energy bills, into force from October, implying the first change would be made in January.

By changing the price cap four times a year, Ofgem can make it more reflective of the international gas prices, taking some price-related pressure off suppliers. Also, the proposed changes will ensure cost recovery for suppliers in a better timescale.

The energy regulator is asking for customer opinions on a plan to add between $49.45 (£40) and $98.9 (£80) to their annual bills from October. Energy suppliers are also expected to shoulder excess energy costs during winter and recoup the same during summer.

Source credit: https://www.independent.co.uk/business/cap-on-energy-bills-could-be-reviewed-four-times-a-year-under-ofgem-plans-b2079755.html

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tadmin

tadmin currently works as a content developer for This is Our Town Richmond Upon Thames.

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