By Jaime Llinares Taboada
U.K. energy regulator Ofgem on Thursday confirmed that the energy price cap will be updated quarterly going forward, rather than every six months.
The change is intended to reduce the dislocation between wholesale and retail energy prices in Britain, which last year contributed to a large number of suppliers going bankrupt. The price cap reflects the actual cost of supplying energy to households, and caps the level of profits for retail firms at 1.9%.
Ofgem said that moving to quarterly updates will reduce the risk of further large-scale supplier failures, which cause huge disruption and increase costs for consumers. "It isn't in anyone's interests for more suppliers to fail and exit the market," it said.
Ofgem warned that customers face a very challenging winter ahead, with much higher prices for gas and electricity.
The regulator said that the change will also allow households to see bills falling more quickly when wholesale prices ease. There are 24 million customers protected by the price cap in Britain.
Write to Jaime Llinares Taboada at firstname.lastname@example.org; @JaimeLlinaresT
(END) Dow Jones Newswires