In accordance with new measures intended to prevent price shocks, household energy bills will be updated every three months.
The price ceiling, which currently determines the most providers in England, Scotland, and Wales may charge customers, is updated every six months.
According to energy regulator Ofgem, the modification will allow customers to benefit more swiftly from price increases and decreases.
Energy costs skyrocketed in April, and it is anticipated that they will do so once more when the ceiling is raised in October.
Customers “have a very tough winter ahead,” according to Ofgem, which also admitted that the situation was “very frightening” for many.
Ofgem stated in May that the typical household should anticipate a rise of £800 to £2,800 year, but it now claims that costs are looking higher than when it made that prediction.
Industry experts Cornwall Insight predicted that the average family will pay an additional £3,358 per year beginning in October and £3,615 per year beginning in January.
The average annual bill was £1,400 in October 2021.
Northern Ireland is exempt from the price restriction, yet there have been price increases for residents there as well.
Energy providers will be able to anticipate how much energy they will need to buy for their clients more accurately, according to Ofgem, if the price ceiling is updated more frequently. Consequently, there may be less of a chance for more suppliers to fail.
More than 30 UK energy companies have folded since the beginning of last year as a result of businesses being unable to pass on the entire cost of skyrocketing wholesale gas prices to their customers due to the price restriction.
“The move made today will help in some ways to stabilize the energy market, lowering the likelihood of more widespread supplier failures, which would create severe disruption and drive up consumer costs. No one has any incentive for additional vendors to falter and leave the market “By Ofgem.
However, Simon Francis of the advocacy organization End Fuel Poverty Coalition criticized the choice as “just barbaric.”
In the end, he claimed, “this decision will push more people into fuel poverty in the thick of winter, adding to the strain on the NHS and maybe increasing the number of excess winter deaths this year.”
“People will be able to remain warm this winter and into the future only with a complete program of emergency financial support, a quick expansion of energy efficiency programs, and a commitment to bringing more inexpensive renewable energy on stream.”
The amount energy suppliers pay producers for their electricity and gas is the foundation of the energy price limit that was instituted in 2018. It establishes a maximum price per unit of energy that suppliers may charge as well as a profit ceiling for energy providers.
The quota has already been raised because of increasing demand for gas following the relaxation of COVID restrictions and subsequent price increases due to the conflict in Ukraine.
One of the greatest gas producers in the world, Russia has already stopped supplying certain European nations. In reaction to the invasion, Western countries have also taken steps to gradually phase out Russian imports. Due to this, demand for alternative energy sources has surged, pushing up worldwide prices.
Ofgem forewarned that this would cause the price cap, which will be released at the end of August, to increase once again. However, because it will change every three months, any decreases in wholesale prices would be passed on to users more swiftly.
In the current volatile market, paying rates that are up to six months old is “no longer sustainable” and “could mean either consumers paying too much for months if wholesale prices have fallen or suppliers left unable to supply gas with the money they are allowed to charge if prices have increased,” according to the report.