A quarterly update of the energy price cap will not lead to a reduction in customers’ bills, said the Office of Gas and Electricity Markets (Ofgem).
The regulator earlier said yesterday they are looking to move towards quarterly updates on the energy price cap rather than every six months.
This new plan could potentially mean that energy prices could go up as many as four times a year.
However, Ofgem says that this will “benefit consumers overall.”
“Currently prices are obviously very high, and although we don’t expect a drop for consumers in the near future.
“We are clear there is likely to be a rise in the price cap this autumn, medium to long term if and when they do drop a timelier and more responsive price cap will pass these savings on more quickly to consumers,” a spokesman told Mancunian Matters.
The regulator added that this move is not just about passing on “cost changes” but about making sure the price cap reflects the real market.
“No one benefits from suppliers going under: it reduces competition and the costs of that failure and moving the customers over to another supplier etc. is ultimately paid for by consumers,” added the regulator.
The national-level regulator also said they commissioned an assessment of different policy options on consumers to understand what financial impact it would have.
“The analysis suggests the quarterly updates is cheaper than the status quo for all households/ income groups in a high energy price situation – as we have now – which is positive,” said Ofgem.
They also said that this doesn’t mean customers should expect a reduction in their bill since wholesale prices are still high, which dictates the price level.
“It just means that overall this is cheaper for customers than the current approach. In lower prices and a more stable market, the quarterly updates and status quo cost the same to consumers. But quarterly reduces the risks in the market, so saved consumers money overall,” they added.
MoneySavingExpert Martin Lewis called the changes a “f***ing disgrace that sells consumers down the river.”
He later apologised to the Ofgem staff for behaving badly during a briefing.
“My ire is institutional, not individual. It was inappropriate,” he tweeted.
“My breaking point was when hearing how instead of listening to calls to scrap its proposed market stabilization charge, it was making it harsher to really ‘stop the harmful effects of competition’
“Ie staggeringly its aim’s to effectively STOP firms undercutting the price cap…”
Despite the fury from the public about the cost of living crisis, No10 defended Safeguarding Minister Rachel Maclean, who advised people to work longer hours or move to better-paying jobs.
