CMA launches consultation to pave way for prepayment meter price cap

Jessica Morris
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Energy consumption in Europe
Prepayment meter price caps could help affected households cut bills by £300m a year (Source: Getty)

Britain's competition watchdog today started consulting on a draft order to show how its promised price caps for pre-payment energy meters can be implemented.

The price cap for around four million households on prepayment meters was one of the 30 measures put forward by the Competition and Markets Authority as a result of its two-year investigation into the Big Six energy suppliers.

The draft order will set out the technical details of how an energy meter price cap can be calculated and implemented.

Read more: National Grid seeks industry's views on creating a flexible energy market

A final version will be published before Christmas so that the price cap can come into force in April.

"It is unacceptable that four million households on prepayment meters, many of them vulnerable, face higher bills than other energy customers," Roger Witcomb, chairman of the energy market investigation, said.

"This price cap will provide a real help to those customers until the disadvantages they face are addressed by the roll-out of smart meters and our other requirements."

The CMA’s investigation had found that the cheapest available prepayment deals were £260 to £320 a year more expensive than those available for direct debit households.

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It believes that the price cap on prepayment meters, which would last until the end of 2020, would help affected households cut their energy bills by about £300m a year.

Alex Neill, Which? managing director of home and legal services, said: "It's good to see the CMA and Ofgem are committed to new protections for prepayment meter customers who are currently getting a very poor deal.

"In order for the price cap to be successful it has to be set at the right level to ensure some of the most vulnerable energy consumers aren't being taken advantage of."

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