The energy regulator has announced it is to consider a new “dynamic” price cap which is based on the time of day households use their energy.

Ofgem has launched a consultation on a range of options for the future of the price cap, which includes a price cap which offers "time-of-use dependent unit rates to encourage consumer flexibility".

It also plans to introduce a targeted price cap, which could be based on a variety of factors such as vulnerability.

Ofgem’s director general of retail and markets, Tim Jarvis, said: “While the price cap played an important role in protecting consumers from the loyalty penalty that existed before its introduction, the energy market is changing as we move to net zero, and we recognise the systems we have in place may need to change too.

“We’re looking in detail at the elements of the price cap that have worked well and the challenges we’ve identified in recent years, while also considering how a wide range of future consumers will use and pay for energy to make sure we develop the right measures that will protect and benefit consumers across the board.“

We will continue to work with Government, industry, consumer groups, charities and the public on the future of pricing regulation.

"Our aim is ensure the market works for everyone.”