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Thursday, Sep 04, 2025

UK energy regulator proposes more frequent price cap updates

UK energy regulator proposes more frequent price cap updates

Britain's energy regulator Ofgem on Friday opened a consultation on a proposal to switch from half-yearly to quarterly price cap updates and reducing the advance notice for new tariffs to take effect.
"We are consulting on a number of changes to the price cap methodology in response to the recent unprecedented rise in wholesale market prices and volatility," Ofgem said.

Energy prices for millions of British households are set to soar from April after the energy regulator said on Thursday it would raise its cap on the most widely used tariffs by 54% after record global gas prices last year.

Quarterly updates - Ofgem's preferred option - would significantly reduce volume risk in falling and rising markets and see smaller, but more frequent changes for consumers, it said.

Other options up for consultation were keeping the six-month cap, but with the possibility of in-cap reviews in exceptional circumstances, and six- or 12-month fixed price cap contracts.

Ofgem is also seeking views on reducing the advance notice it gives to suppliers of the updated price cap levels.

"This helps to reduce the volume risk faced by suppliers and therefore reduces costs that would otherwise need to be reflected in the price cap, reducing prices to consumers," Ofgem said.

All market risks currently sit with suppliers, with the time lag between market prices and their reflection in the price cap a particular challenge, it added.

Over the last year 29 British energy suppliers have exited the market, with 26 alone going bankrupt since August 2021, Ofgem said.

The consultation will end on March 4.
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