Price cap - Decision on changes to the wholesale methodology

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We consulted in May 2022 on changes to the default tariff cap wholesale methodology to address volume risk and backwardation costs. We have carefully considered evidence and representations provided by stakeholders.

This document sets out our decision, rationale and consideration of stakeholder responses. We have decided to move to quarterly updates, reduce the notice period between the cap level announcement and start date and update the wholesale methodology to include backwardation costs. Alongside the decision document, we have also published a licence modification notice and three models.

Main document

[Price cap - Decision on changes to the wholesale methodology [PDF, 1.01MB]

](https://www.ofgem.gov.uk/sites/default/files/2022-08/Price%20cap%20-%20Decision%20on%20changes%20to%20the%20wholesale%20methodology.pdf)

Subsidiary documents

[Price cap - Decision on changes to wholesale methodology - Modification Notice [PDF, 174.54KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-08/Price%20cap%20-%20Decision%20on%20changes%20to%20the%20wholesale%20methodology%20-%20040822%20Modification%20Notice.pdf)

[Price cap - Decision on changes to the wholesale methodology - Annex 2 - Wholesale cost allowance methodology [XLSX, 7.54MB]

](https://www.ofgem.gov.uk/sites/default/files/2022-08/Annex_2_-_wholesale_cost_allowance_methodology_v1.12%20%28input_data_removed%29.xlsx)

[Price cap - Decision on changes to the wholesale methodology - Annex 4 - Policy cost allowance methodology [XLSX, 384.55KB]

](https://www.ofgem.gov.uk/sites/default/files/2022-08/Annex_4_%E2%80%93_policy_cost_allowance_methodology_v1.12.xlsx)

[Price cap - Decision on changes to the wholesale methodology - Default tariff cap level [XLSX, 1.66MB]

](https://www.ofgem.gov.uk/sites/default/files/2022-08/Default_tariff_cap_level_v1.12.xlsx)

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