Energy watchdog proposes price cap on pre-payment meters

A report by the watchdog into the UK’s energy sector has recommended changes to the industry after finding customers had been overpaying by around £1.7 billion a year.

It has also proposed that the regulator, Ofgem, keeps a database of customers that have been on a standard rate for three years.

This database will then be opened up so these customers can be targeted directly by other suppliers.

The proposals, which follow 18-month investigation, are designed to reform the energy market and increase competition to help consumers save money.

The CMA has outlined a range of proposals to promote switching in the industry and break the dominance of the largest suppliers:

But the CMA has scrapped plans first mooted last July to set a maximum price limit for standard variable rate tariffs, which would have seen prices cut or frozen for around 70 per cent of customers with the Big Six providers.

Roger Witcomb, chairman of the CMA’s energy market investigation, said: “We have found that the six largest suppliers have learned to take many of their existing domestic customers – some 70 per cent of whom are on ‘default’ standard variable tariffs – for granted, not just over prices, but with their service and quality.”

He added: “Energy is both an essential and expensive item for many of these four million households, whose cheapest tariffs are around £300 more expensive than for other customers.”