Energy price cap methodology: group correction factors

Details of outcome

We have decided to include an allowance for the GCFs in the default tariff cap from 1 January 2026. The decision document attached below sets out the rationale behind our chosen approach following the feedback we have received during the consultation. It also sets out the next steps for implementation and outlines our approach towards enduring updates.

Read the full outcome

Original consultation

We are considering how best to ensure the treatment of electrical losses in the price cap continues to accurately reflect the relevant parameters used in settlement. This is because group correction factors have increased since the cap was introduced.

Group correction factors are used to correct residual discrepancies between energy entering the distribution system and energy allocated to suppliers. As a result of the increase, our existing assumptions no longer reflect actual system losses.

We are reviewing the assumptions behind these electrical loss factors and proposing a change to include an adjustment for group correction factors, so we can better account for this issue.

Who should respond

We would like views from people with an interest in the settlement process, including suppliers, and industry bodies.