Energy bills could change every three months if new plans aimed at avoiding increase shocks are to go ahead. Ofgem, the energy regulator, are proposing to update the energy price cap quarterly rather than every six months.
They say 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. But Uswitch, a price comparison site, has said this plan does little to solve the harsh increases coming to many householders this year.
Their comments come as the UK cost of living is expected to rise further, despite the energy price cap rising by 54% last month and inflation reaching a record level of seven per cent.
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Gas and electricity bills are currently updated every six months but Ofgem's plan will see them revised ever three months. Justina Miltienyte, head of policy at Uswitch.com, has said that updating the prices this regularly will mean customers will experience the pain of rising prices on a more regular basis.
“Updating the price cap on a quarterly basis would mean a second update hot on the heels of October’s expected increase in rates," she said.
“This could demand a swift revision to household budgets at one of the most expensive times of year, raising the possibility of a painful New Year hangover.
“Until now, the price cap has at best acted as a delay mechanism for the pain of rising wholesale prices, but it is unable to prevent harsh increases hitting customers altogether. A quarterly review means that the ability of the cap to delay the pain of rising prices is shorter."
On April 1, energy regulator Ofgem hiked its energy price cap by 54%. The energy price cap, which limits the rates a supplier can charge for each unit of gas and electricity you use, jumped by £693 from £1,277 to £1,971.
Prepayment customers are being worse hit, with a jump of £708 from £1,309 to £2,017, and that's without the possibility of further hikes, with wholesale gas prices increasing regularly.
Ms Miltienyte added: “Conversely, if wholesale prices start falling, Ofgem would have the ability to pass these through to those on standard plans a little sooner.
“The price cap has always been a sticking plaster to deal with the problems of the energy market, and this proposed change is another attempted quick fix. The cap fails to give real, meaningful help to those who need it the most and this has been brought into extreme focus as costs have rocketed. More fundamental longer-term reform is still needed.”
