Energy bills will be reset every three months under new plans aimed at easing the cost-of-living crisis for British households.
Ofgem has proposed to update the energy price cap quarterly rather than every six months from October.
The regulator said the move would allow customers to benefit sooner when prices begin to fall from their current highs, while it would also help suppliers more accurately predict how much energy they need to purchase.
The soaring cost of natural gas – fuelled by the war in Ukraine – has driven energy bills to record highs and led to the collapse of more than two dozen suppliers.
The energy price cap jumped 54pc in April and is expected to rise again in October, piling further pressure on strained budgets.
FTSE 100 opens lower
The FTSE 100 has dropped at the open as disappointing economic data from China weighs on markets.
The blue-chip index fell 0.6pc to 7,377 points.
Ryanair cuts losses and eyes return to profit
Ryanair has narrowed its losses and said it hopes to return to “reasonable profitability” in its current year.
The budget airline reported a loss of €355m (£302m) for the year to the end of the March, down from €1.02bn the previous year when trading has hammered by the pandemic.
Ryanair’s traffic recovered strongly as it carried 97.1m passengers, up from just 27.5m the year before. It hopes to boost this further to 165m this year.
However, boss Michael O’Leary warned it was “impractical, if not impossible” to give guidance for 2022-23 due to the risk to holiday bookings from Covid and the Ukraine war..
The airline said it was having to slash prices to secure bookings amid ongoing uncertainty.
Mr O’Leary added it would be “challenging” getting through airports this summer. He warned there were “pinch-points” at airports such as Heathrow and Manchester, where he said “too many people” have been sacked.
Oil drops on weak China data
Oil prices have tumbled for the first time in four sessions as Covid lockdowns strained the economy of the world’s biggest importer.
Benchmark Brent crude dropped 1.4pc to $110 a barrel, while West Texas Intermediate reversed earlier gains to trade at around $109.
Ugly economic data from China is fuelling concerns of a drop in demand. Traders have been weighing this risk against the war in Ukraine, sparking tumultuous trading over the last few months.
China’s economy slumps as zero-Covid takes its toll
China’s economy slumped in April as strict Covid lockdowns took their toll on retail and factory activity.
Full or partial lockdowns were imposed in major centres across the country in March and April, including in Shanghai, confining workers and consumers to their homes.
Retail sales shrank 11.1pc from a year earlier – the biggest fall since March 2020. Factory production fell 2.9pc, dashing expectations for a rise and the largest decline since February 2020,
Analysts warned China’s current downturn may be harder to shake off than the one seen during the height of the first Covid wave in early 2020.
Capital Economics said: “The upshot is that while the worst is hopefully over, we think China’s economy will struggle to return to its pre-pandemic trend.”
The weak data sent Chinese stocks into reverse and put an end to the rally enjoyed by other Asian markets this morning.
Surge in gas deliveries pulls down prices
The overhaul comes as a huge wave of gas deliveries have helped to bring UK prices back down to their pre-crisis lows.
UK gas prices have dropped 13pc since the start of the year and are just a fifth of the benchmark European price.
That’s thanks to massive cargoes of liqufied natural gas, which have been delivered to UK ports to be passed on to Europe through pipelines.
However, the Telegraph revealed critical shipments of natural gas are being turned away from British ports because National Grid fears it will be overwhelmed by supplies.
Read more on this story: National Grid slashes gas shipments meant to tackle energy crisis
Ofgem aims for ‘fair and resilient’ market
Jonathan Brearley, chief executive of Ofgem, says the changes are needed to cope with unprecedented market conditions:
Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone. Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.
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.
The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.
Price cap set for overhaul
UK energy bills could be reviewed every three months under new proposals by Ofgem.
The regulator is launching a consultation into whether the price cap should be updated quarterly from October, rather than every six months.
The plan is designed to keep energy bills more up-to-date, allowing customers to benefit from cheaper bills sooner once prices start to fall from their current highs.
It will also help suppliers work out how much energy they need to buy for their customers.
5 things to start your day
1) National Grid slashes gas shipments meant to tackle energy crisis Company fears network will be overwhelmed by deliveries to LNG terminals
2) Ministers pile more pressure on Andrew Bailey over inflation mistakes Business Secretary Kwasi Kwarteng says inflation overshoot ‘is an issue’ for the Bank of England
3) Traders bet £5bn against the pound Markets expect sterling to plunge even lower as UK economy weakens
4) Goldman boss warns of ‘very high’ recession risk in US Banking giant’s senior chairman Lloyd Blankfein said firms and households should prepare for a recession
5) UAE rival launches shock $4.4bn raid on Vodafone Etisalat Group becomes biggest shareholder in UK telecoms giant with 9.8pc stake
What happened overnight
Hong Kong equities opened higher on Monday, following a Wall Street bounce sparked by a rally among tech-rich stocks.
The Hang Seng climbed 1.2pc. The Shanghai Composite Index rose slightly by 0.5pc, while the mainland’s second exchange the Shenzhen Composite increased 0.8pc.
Tokyo shares also opened higher, with the benchmark Nikkei 225 index gaining 1.2pc, while the broader Topix index rose 1pc.
Coming up today
- Corporate: Diploma (Interim results); Greggs (Trading update)
- Economics: Growth forecasts (EU); retail sales, industrial prod (China)