Consultation on Medium Term Changes to the Price Cap Methodology
- Closed (awaiting decision)
- Closed (with decision)
- Default tariff cap level: 1 April 2022 to 30 September 2022
- Price Cap - Decision on the potential impact of increased wholesale volatility on the default tariff cap
- Price Cap – Decision on the process for updating the Default Tariff Cap methodology and setting maximum charges
- Adapting the price cap methodology for resilience in volatile markets
- Rising wholesale energy prices and implications for the regulatory framework
- Price Cap – Consultation on the potential impact of increased wholesale volatility on the default tariff cap
- Price Cap – Consultation on the process for updating the Default Tariff Cap methodology and setting maximum charges
We are consulting on a number of changes to the price cap methodology in response to the recent unprecedented rise in wholesale market prices and volatility. First, we are seeking feedback on the implementation of moving to quarterly price cap updates (our preferred option) or price cap contracts. These are compared to the alternative of a strengthened status quo.
We are also consulting on two additional aspects: reducing from two months to one month the advance notice Ofgem gives to suppliers of the updated price cap level before it comes into effect. And a new mechanism to address backwardation cost risk.
We particularly welcome responses from energy suppliers, consumer groups and charities. We would also welcome responses from other stakeholders and the public.
This document outlines the scope, purpose and questions of the consultation and how you can get involved. Please send all responses by 4 March 2022.