(Reuters) -British energy regulator Ofgem has started talks on the future of price caps, it said on Monday, adding it was considering how energy regulation as a whole needs to adjust to protect customers as they move to net zero.
A cap on electricity and gas bills has been in place since January 2019 and was designed to make sure people paid a fair price for their energy based on a calculation of factors including wholesale energy prices and network costs.
It currently sets a cap on the amount suppliers can charge for each unit of gas or electricity for the most widely used tariffs, and is reviewed every four months.
Ofgem said while protecting customers is still important there have been changes in some way people are charged for electricity, such as agile pricing which enables people to pay less to use electricity when demand is low, and save money but using less when demand is high.
These time-of-use tariffs are expected to grow as more households use electric heat pumps or electric vehicles.
“As customer diversity grows, and more households adopt time-of-use tariffs, it could become harder to retain a universal price cap that is suitable for everyone,” Ofgem said in a statement.
It has suggested options such as a dynamic price cap, with unit rates set on the time of use to help encourage consumers to be more flexible about when they use energy.
It also said there could be a targeted price cap to protect vulnerable consumers.
The consultation is open until May 6 and is seeking views from charities, consumer groups, businesses, bill-payers, and suppliers.
(Reporting by Susanna Twidale in London and Radhika Anilkumar in Bengaluru; Editing by Maju Samuel and David Evans)
