Ofgem considers new price cap based on time energy is used to reduce household bills [Video]

Ofgem’s energy price cap could be replaced with a new system measuring the time of day energy is used and factored by a customer’s “vulnerability”, it has been announced.

The watchdog has launched a consultation on updating the price cap, which is the maximum amount energy suppliers can charge for each unit of energy for households on a standard variable tariff.

Ideas put forward include a “time-of-use” rate to introducing a targeted cap that could be based on factors such as vulnerability, and protections such as capping the profit margin for suppliers.

Ofgem is asking charities, consumer groups and billpayers for their views on the future alternatives.

The body said the cap, introduced in 2019, could become outdated as more people signed up to tariffs rewarding the change of time of their energy consumption.