Britain’s should adjust the price cap on energy prices paid by consumers every three months instead of every six months to better match price movements in the wholesale market, energy regulator Ofgem proposed on Monday.
“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,” Ofgem head Jonathan Brearley said in a statement.
“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,” he said.
The regulator raised its cap on the most widely used energy tariffs by 54% after record global gas prices last year. The global price surge and cap on prices consumers could be charged led to more than 30 energy companies going bust in Britain.
British wholesale gas prices spiked to 670 pence per therm in March but have since fallen sharply amid plentiful shipments of liquefied natural gas (LNG) arriving at British terminals.
Ofgem will hold consultations on the proposed changes until June 14.
“This statutory consultation would allow Ofgem to bring in the changes from October and support the sector through a potentially challenging winter,” the regulator said.