Energy price cap methodology: backwardation deadband
- Statws yr ymgynghoriad:
- Open
- Dyddiad cyhoeddi:
- Dyddiad cau:
- Topic:
-
Energy pricing rules
- ➞ Energy price cap
- Sector diwydiant:
- Supply and Retail Market
Dolenni cysylltiedig
We are seeking views on removing the backwardation deadband in the price cap methodology for the wholesale cost allowance.
Consultation description
Backwardation is when the cost to suppliers for an upcoming price cap period is higher than the cost of buying energy for a full year. Contango is the opposite.
We are reviewing whether including a deadband which sets a threshold beyond which the backwardation costs and contango benefits are passed through to consumers, remains appropriate.
In this consultation, we set out our proposal to remove the deadband, reducing uncertainty and risks across the energy market while continuing to protect consumers. We set out our main consideration for impacts on customers and suppliers as part of our rationale for proposing this change.
Who should respond
We would like views from people who have an interest in how we set the wholesale allowance in the default tariff cap. This includes:
- energy suppliers
- energy industry bodies
- consumer groups
- charities
How to respond
Submit your response by 25 September 2025 by emailing priceprotectionpolicy@ofgem.gov.uk.