Martin Lewis explains inflation and energy bills
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Ofgem is putting the proposal out to consultation following criticism the twice-yearly adjustment arrangement – in April and October – was a key driver when suppliers began collapsing at the height of the wholesale gas price shock. The cap, which was credited with protecting families from the worst of the hikes in raw energy costs, prevented companies passing on the unprecedented increases to their customers.
Ofgem insisted its new proposals would enable greater flexibility that would see bills to rise or decline more quickly.
The energy regulator said: “A more frequent price cap would reflect the most up to date and accurate energy prices and mean when prices fall from the current record highs, customers would see the benefit much sooner.
“This change would also help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for consumers.”
Ofgem has previously said the proposal would have meant prices going up ahead of the rise which came into force last month.
The consultation also means no cap adjustment is imminent.
But there remain fears bills could surge to nearly£2,600 a year when the next price camp is due in October, according to the latest forecasts.
This, for the first time, would reflect the true impact of Russia’s continuing war in Ukraine.
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