Energy price cap to be updated four times a year under Ofgem plan

Great Britain’s energy regulator has confirmed it is planning to update the energy price cap four times a year from October to allow it and consumers to adjust more quickly to volatile markets.

Ofgem on Monday published a consultation on proposals to introduce new reviews of the price cap in January and July, adding to existing changes in April and October.

The proposals came after a period of turmoil on global energy markets pushed up gas prices in the UK and across the world – becoming a driving force in global inflationary pressure. The price increases were prompted by the snap-back in global energy demand after coronavirus lockdowns followed by the invasion of Ukraine by Russia, Europe’s biggest gas supplier.

Related: Saudi oil giant Aramco reports 82% rise in quarterly profits

In response in April average Great British prices rose by a record 54% to £1,971. A further increase is expected to as much as £2,600 for the winter.

The scale of the price rise – and the collapse since September 2021 of 29 British energy suppliers who failed to hedge appropriately – has prompted scrutiny of Ofgem’s role, and the ways that it could help consumers further.

Jonathan Brearley, the Ofgem chief executive, said: “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.”

The proposals announced on Monday also included tweaks to the methodology of working out the price cap that the regulator hopes will result in energy suppliers being able to recover costs during unusual market conditions. Ofgem argued that without these changes fewer energy suppliers would remain in the market, meaning it would be “unlikely that there will be the investment needed for the net zero transition”.