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UK regulator wants quarterly consumer energy price cap adjustments
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(Reuters) – Britain’s should adjust the price cap on energy prices paid by consumers every
(Reuters) – 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.
(Reporting by Nora Buli in Oslo; Editing by Edmund Blair)
A price cap is a regulatory limit on the maximum price that can be charged for a service, such as energy, to protect consumers from excessive charges.
Ofgem, the Office of Gas and Electricity Markets, is the regulator for the electricity and gas markets in Great Britain, ensuring fair competition and protecting consumers.
Wholesale energy pricing refers to the cost of energy sold in bulk on the market, which can fluctuate based on supply and demand dynamics.
Energy tariffs are the rates charged to consumers for electricity and gas, which can vary based on the supplier and market conditions.
Liquefied natural gas (LNG) is natural gas that has been cooled to a liquid state for storage and transport, allowing for easier shipping over long distances.
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