Prepay meter cap to slash energy bills for low income homes

A cap on prepaid meters will bring energy prices down for low income families. Picture: Contributed

A cap on prepaid meters will bring energy prices down for low income families. Picture: Contributed

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Millions of low income householders are to see their energy bills slashed after the regulator announced a price cap on pre-payment meters.

After a two-year investigation, the Competitions and Markets Authority (CMA) said firms can offer as many tariffs as they like to target different markets, and exclusive deals to encourage people to switch.

The CMA said around 70 per cent of the customers of the six largest energy firms are still on the more expensive “default” standard variable tariff, adding that the average customer could save more than £300 by switching to a cheaper deal.

Under the new proposals the industry watchdog, Ofgem, would also keep a database of customers who have been on a standard rate for three years. Customers on the database would then be targeted directly by other suppliers in a bid to encourage them to switch.

Citizens Advice Scotland energy spokeswoman Kate Morrison said: “It’s clear energy bills are too high and that the energy market has not been working for consumers. We have been urging the CMA to act for some time, and a number of today’s proposals are very welcome.

“Scottish consumers are more likely to have ‘restricted meters’ which makes it really hard for them to switch or even to compare their energy prices online.”

But Richard Lloyd, chief executive of Which? warned: “The regulator must make sure that releasing customer data to rival suppliers is done so that it genuinely helps people switch from the most expensive tariffs to better deals, rather than result in unwanted nuisance calls.”

Major energy firms, including Perth-based SSE and ScottishPower in Glasgow said they welcomed proposals which benefit customers.

Keith Anderson, chief corporate officer at Glasgow-based ScottishPower, said: “We embrace moves that help consumers engage more with the market to secure better deals. ”

Alistair Phillips-Davies, Perth-based SSE’s chief executive, said: “We will welcome remedies that benefit customers, work in practice and can be implemented pragmatically.”

Energy UK chief executive, Lawrence Slade said: “With over 30 companies in the market competing for customers, prices have been steadily falling and there are a wide range of tariffs on offer. There are a number of deals that are over £130 cheaper than this time last year and it is positive that switching numbers are increasing.

“However, more needs to be done.”

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