Previously, the cap was updated twice a year, but with continuing volatility in the energy market, the regulator believes that reviewing the cap every three months will allow it to adjust to that volatility more quickly. Additionally, if wholesale prices fall, those savings would be able to be passed on to customers more quickly.
The quarterly price cap reviews will begin in October 2022, with customers first seeing the effects in January 2023.
Justina Miltienyte, head of policy at Uswitch.com, said: “The price cap has always been a sticking plaster to deal with the failures of the energy market. This proposed change is another attempted quick fix, aimed at helping suppliers rather than customers who are unable to switch to a better deal to escape its impact.
“A quarterly review will mean that consumers are less shielded from rising prices in the short term. The next price change due on 1 January - just after Christmas - is already expected to increase from the price projected in October.
“The more frequent review will eventually mean that if wholesale prices start falling, Ofgem will be able to pass these cuts onto bill-payers a little sooner. However, it is too early to predict when that will happen, as the market remains volatile.
"The cap fails to give real, meaningful help to those who need it the most and merely kicks the can down the road of the costs being passed through to customers on price capped tariffs.
“This has been brought into extreme focus as costs have rocketed and the majority of customers are now being impacted by these changes. More fundamental longer-term reform is still needed for the long term.”
The UK energy market has been extremely volatile in 2021 and carried on into 2024, mainly stemming from high energy wholesale prices. Find out what this means for you here.Learn more