The energy regulator said four million pre-pay customers would be protected by an interim price cap from next April and that it would work with suppliers to help “disengaged” customers to search for cheaper deals.

Ofgem’s announcement follows proposals published last month by the Competition and Markets Authority (CMA) aimed at reforming the energy market.

The CMA’s two year investigation, which concluded last month, confirmed that two thirds of households are disengaged and paying over the odds for their energy compared to those who have switched tariff.

Ofgem said its “remedies” are aimed at freeing up competition and innovation in the market to drive down bills and improve service for all consumers not just a minority.

Those on pre-payment meters, who are among the most vulnerable and least likely to switch, will be protected by an interim price cap which will save them around £75 a year from next April.

Ofgem will work closely with suppliers to help disengaged customers, who remain on expensive standard variable tariffs, to shop around and save money. In particular it will trial more effective prompts on customers’ bills to encourage them to compare tariffs.

Next year Ofgem will pilot the database service, which will allow suppliers to offer disengaged customers better value deals. Protecting the privacy and security of consumers’ data remains a priority.

Ofgem has published a separate consultation today on the CMA’s proposals to remove parts of its Retail Market Reforms so consumers can enjoy a wider choice of innovative good value deals. Ofgem has also consulted on its approach to the CMA’s recommendation to remove the requirement on price comparison websites to display all the tariffs on the market.

Combined with other changes already happening, such as smart meters and faster switching, these remedies provide an opportunity to transform the energy market. Ofgem added that it will continue it Be An Energy Shopper marketing campaign this autumn encouraging consumers to save around £300 a year by shopping around.

Ofgem’s annual review of the retail energy market, also published today, confirmed that the majority of consumers who do not engage in the market are losing out. It also found that the proportion of people on expensive standard variable tariffs has dropped from 69 per cent last year to 66 per cent in March this year as switching rates increase.

Ofgem chief executive, Dermot Nolan, said: “The CMA’s final report is a watershed moment for industry and consumers and points the way to a fairer and more competitive future. I call on energy companies and consumer groups to seize this opportunity.”