Energy bills could rise and fall faster under new plans

The UK should update the price cap on energy bills every three months instead of twice a year to help households, the energy watchdog has proposed.

Ofgem said that a more frequent price cap would reflect the most up-to-date energy prices.

It would mean "when prices fall from the current record highs, customers would see the benefit much sooner".

Households are already facing pressure from high gas and electricity prices after the price cap rose in April.

The price cap is the maximum amount suppliers can charge households in England, Wales and Scotland on standard tariffs, affecting around 18 million homes.

Last month, it jumped from £1,277 to £1,971 and is forecast to soar a further 32% when the cap is revised again in October.

Ofgem's chief executive Jonathan Brearley said: "Today's proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers.

"It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers."

Since early last year, more than 30 UK energy companies have gone bust after firms found themselves unable to pass on the full cost of soaring wholesale gas to customers because of the price cap.

Rising household energy bills have also pushed up the UK inflation rate to 7% and it is expected to show another sharp rise for April when new data is announced on Wednesday.