POST Online Media Lite Edition


Ofgem announces energy prepay cap to save UK customers £80 a year

Staff Writer |
Energy regulator Ofgem has announced a prepayment cap that is expected to save customers around £80 a year.

Article continues below

The introduction of the temporary price cap, which comes into effect this April, follows a two-year investigation into the energy market by the Competition and Markets Authority.

The cap will initially apply to over four million households who prepay for their energy, mostly with traditional prepayment meters, and are among those least able to benefit from competition.

The levels of the cap vary for electricity and gas, by meter type and region.

Ofgem said competition among suppliers for prepayment customers is less developed than for those who pay by direct debit, cash or cheque, meaning there are fewer tariffs available and those that are available are generally more expensive.

Customers with prepayment meters are also more likely to be in vulnerable circumstances than those paying by other means.

The cap is due to expire at the end of 2020 when the roll out of smart meters is completed, which will help prepayment meter customers in particular access better deals.

What to read next

UK energy regulator Ofgem: Costs should be spread fairly
Ofgem cuts electricity prepayment tariff for 3 million UK households
UK energy regulator confirms new rules to make switching easier