By Nina Chestney
LONDON (Reuters) -British energy market regulator Ofgem will review a price cap on domestic energy prices quarterly rather than twice a year, which will increase consumer bills more frequently if wholesale prices continue to rise.
British wholesale gas prices hit a record high after Russia's Feb. 24 invasion of Ukraine and have remained elevated despite falling back from their peak.
Britain receives about 4% of its gas from Russia, but lower overall Russian supply to Europe means competition is intense, pushing prices higher.
Ofgem said in a fast-moving energy market, six months was too long for a review.
"Today's change will go some way to provide the stability needed in the energy market, reducing the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers," Ofgem said.
The cap, in place since January 2019, sets a maximum charge per unit of energy and limits suppliers' profits to 1.9%.
TOUGH WINTER LOOMS
Ofgem said a six-month review delays the inevitable and means bigger changes twice a year instead of smaller ones four times a year. If wholesale prices fall then consumers would overpay for months, but if they rise suppliers sell gas at a loss for months.
Around 30 mainly small and medium-size suppliers have failed since last year.
Ofgem said it will publish its next price cap level at the end of August.
The Bank of England expects the cap on consumer energy bills to rise to around 3,500 pounds, Governor Andrew Bailey said on Thursday, citing conversations with the energy regulator Ofgem.
"Prices are forecast to go up in the medium term, meaning that struggling households are likely to see bills rise even faster," said Andy Prendergast, national secretary of the GMB energy union.
The End Fuel Poverty Coalition campaign group warned more people would be forced into so-called fuel poverty.
Last May, the government set out a 15 billion pound ($18 billion) package of support for households, saying each home would receive a 400 pound energy bill credit when the price cap rises in October, but the forecast price rise then was lower.
Britain is soon to have a new prime minister and there will be pressure for extra support measures.
($1 = 0.8217 pounds)
(Reporting by Nina Chestney in London and Aby Jose Koilparambil in Bengaluru; Editing by Emelia Sithole-Matarise, Andrew Cawthorne, Kirsten Donovan)