Ofgem cap to save energy customers ˆ80 a year

Energy regulator Ofgem has announced a temporary cap on prepayment meters that it says will save four million households around ˆ80 a year.

The announcement follows a two-year investigation into the energy market by the UK's competition watchdog which found the Big Six suppliers were overcharging customers by up to ˆ1.4bn a year.

Ofgem said the cap, which will apply from April, would help households who pay in advance for their gas and electricity - who it said were among the least able to benefit from competition.

The latest announcement confirms proposals set out last summer.

Ofgem said the levels of the cap would vary for electricity and gas, by meter type and region.

It said many prepayment customers were likely to see reductions in their gas bills of around 10-15%.

Customers who use electricity to heat their homes would see similar falls, the regulator said.

It added that there was less competition among suppliers for prepayment customers meaning they had fewer tariffs available and that they were generally more expensive.

Ofgem chief executive Dermot Nolan said: "We want all consumers to enjoy the benefits of a more competitive energy market, regardless of their circumstances.

"Customers who prepay for their energy are denied the best deals on the market available to those using other payment methods.

"They are also more likely to be in vulnerable circumstances, including fuel poverty.

"This temporary cap will protect these households as we work to deliver a more competitive, fairer and smarter market for all consumers."

Last week, Ofgem demanded an explanation from supplier npower after it announced it was putting up prices for standard tariff energy customers by 10%.



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