Watchdog group Ofgem has announced that it will consider introducing a new “dynamic” price cap based on the time of day that British households use energy.
The UK Energy Regulator has launched a consultation on a range of options for the future of price caps, including a “more dynamic cap” with “time-of-use dependent unit charges to encourage consumer flexibility”.
Other options include targeted caps based on various factors such as vulnerabilities, or setting limits between a supplier’s default rate and the rates available in the market, capping supplier margins. , includes more flexible market-based price protection. It could be capped or replaced with a ban on acquisition-only tariffs.
Mr Ofgem said the price cap, along with a temporary ban on acquisition-only tariffs, would prevent “loyalty penalties” where customers who didn’t pay tariffs would pay higher prices, and the worst of recent market volatility and wholesale markets. said it worked well to protect customers from such incidents. Price hike due to energy crisis.
The report said the gas and electricity retail market is changing as more and more consumers change their consumption and start using electric cars, heat pumps and solar panels.
Tim Jarvis, Ofgem’s Director of Retail and Markets, said: “Price caps have played an important role in protecting consumers from loyalty penalties that existed even before they were introduced, but as we move towards net zero, energy market is changing and we recognize it.” The systems we have in place may also need to change.
“We are taking a close look at the elements of price caps that are working well and the challenges we have identified in recent years, while also looking at how a wide range of consumers will use and pay for energy in the future. We are taking into account and ensuring that we take appropriate measures to fully protect and benefit consumers.
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“We will continue to work with governments, industry, consumer groups, charities and the public on the future of price regulation. Our aim is to make markets work for everyone. ”
