Ofgem considers new price cap based on time energy is used to reduce household bills

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Ofgem’s energy price cap might be changed with a new system measuring the time of day energy is used and a buyer’s “vulnerability”, it’s been introduced.

The watchdog has launched a session on updating the price cap, which is the utmost quantity energy suppliers can cost for every unit of energy for households on an ordinary variable tariff.

Ideas put ahead embody a “time-of-use” charge to introducing a focused cap that might be based on components similar to vulnerability, and protections similar to capping the margin suppliers could make.

The physique stated the cap, launched in 2019, wanted to sustain with the adjustments within the energy retail market with growing numbers of consumers now utilizing electrical autos, warmth pumps and photo voltaic panels.

Ofgem’s director common of retail and markets, Tim Jarvis, stated: “While the price cap played an important role in protecting consumers from the loyalty penalty that existed before its introduction, the energy market is changing as we move to net zero, and we recognise the systems we have in place may need to change too.

“We’re looking in detail at the elements of the price cap that have worked well and the challenges we’ve identified in recent years, while also considering how a wide range of future consumers will use and pay for energy to make sure we develop the right measures that will protect and benefit consumers across the board.”

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