THE ENERGY price cap, which limits just how much energy firms can charge customers, could be changed every three months under new plans.
The cap is typically updated every six months but that time could be halved under new plans announced by Ofgem today.
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It means more frequent updates to the maximum energy suppliers can pass on to their customers on a variable dual-fuel rate.
But the regulator says that the move could help reflect the most up to date and accurate wholesale prices – helping customers battle rising costs.
That’s because, should prices fall from their current record highs, bill-payers would see the benefit much sooner, rather than waiting MONTHS for costs to drop again.
Jonathan Brearley, CEO of Ofgem, said: “Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone.
“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 says the change could take place from October this year.
Nothing has been confirmed yet, but discussions over the move are due to take place until mid June.
Not only might the price cap update help struggling customers, but suppliers would be able to better predict how much energy they need to purchase in the first place.
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That will hopefully reduce the risk of further supplier failures, which ultimately pushes up costs for consumers.
Over 30 firms have folded in the past year due to pressures to keep up with the rising costs.
The price cap was originally set up in January 2019 by Ofgem, in an effort to limit how much providers can charge on default energy bills to spare Brits from being unfairly charged.
But it has meant the providers themselves have been squeezed in what they can pass on, whilst keeping their own business afloat.
What does it mean for energy bills this year?
Energy bills will go up later on this year.
Over the past year, global wholesale prices have increased significantly so the cap is expected to match this.
But regardless of whether the regulator decides to shorten the gap between price cap updates or not, consumers are in for more bill shock in October.
The current six month time frame means another update in the autumn anyway, after the last change landed on April 1.
Forecasts from Cornwall Insight suggest that the cap could reach £2595.19 by that time though.
That means bills will go up ANOTHER £600 for most households.
After the last price cap refresh, energy bills hit an all time high.
They rocketed by 54% when they went up from £1,277 on average to £1,971, all thanks to the last price cap rise.
But the analytics experts predict that by the summer next year, the cap could come DOWN to £2292.40.
It could come down further to £2283.98 another six months after that as well, according to the body.
Closer periods between price cap updates though, could mean a quicker period of decline, should prices go down.
It could also mean a less steep fall between price caps.
The government had announced a £200 rebate earlier in the year to help customers with the rising costs on the way.
It will be applied in October but customers will have to repay the discount in installments from 2022, as the government itself predicts the rocketing price turmoil to die down by then too.
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