By Peter McLaren-Kennedy • 16 May 2022 • 8:30
UK regulator says energy price cap could be reviewed every three
The plan, which governs the price cap for 22 million households in the UK, has according to Sky News been put out for consultation, after the regulator’s current twice yearly review was blamed for the failure of some suppliers.
The cap, which was implemented to protect households from the spike in energy costs, prevented companies from recovering the true cost of supplies resulting in their bankruptcies.
It also meant that households have experienced huge increases each time the review is undertaken, with the average household cost rising 54 per cent in April to around £1,971 (2,320 euros).
Latest forecasts suggest that October could see a similar price hike, taking the average cost to around £2,600 (3,060 euros).
OFGEM in announcing the consultation said that the quarterly review would not only reduce the impact of large price increases, but it would also mean that the cost would come down quicker, as and when the cost of energy drops.
“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.”
As the UK regulator goes out to consultation on how often the energy price cap should be reviewed, it means that no price rises are imminent but that it could mean a large jump again in October should the energy crises continue.
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Originally from South Africa, Peter is based on the Costa Blanca and is a web reporter for the Euro Weekly News covering international and Spanish national news.
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