Ofgem pledges to help 3m energy customers by lowering price cap on prepayment meters

 
Helen Cahill
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The cap was first introduced in April (Source: Getty)

Energy regulator Ofgem this morning promised to cut the bills for around 3m consumers by bringing down the cap on prepayment meters.

A cap on prepayment energy meters was brought in this year, and will be updated every six months to reflect the costs of energy suppliers.

Read more: The government has launched a major review of energy costs

Ofgem said reducing the cap, also known as the "safeguard tariff", will mean a bill reduction of £19 a year on average for affected customers.

The safeguard tariff was introduced to ensure households using prepayment meters were not overcharged for their energy use.

The tariff change will come into effect on 1 October. According to Ofgem's estimates, the average bill for prepayment customers will fall from £1,067 per year to £1,048 per year.

The regulator unveiled plans to protect vulnerable consumers in July, and has set up a trial to help households switch to the cheapest energy supplier.

Ofgem also introduced rule changes for price comparison websites so people would find it easier to switch.

The clamp-down from the regulator comes as British Gas owner Centrica said it will increase electricity prices by 12.5 per cent from September.

The firm said it hadn't increased its prices for four years.

However, Centrica was criticised for increasing prices at a time when demand will spike.

Read more: Ofgem sets out tougher price controls from 2021

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