Ofgem implements competition watchdog proposals – but is accused of not going far enough

Four million households that have to pay in advance for their electricity or gas will have their prices capped from next April, regulator Ofgem has confirmed.

The watchdog, responding to proposals from the Competition and Markets Authority (CMA), estimated that customers on pre-pay meters are overpaying to the tune of £220m a year, says the BBC.

Key or card meters are placed in rental properties to ensure bills are fully paid or are given to customers who have had repayment problems. They typically operate on more expensive energy tariffs and make it difficult for customers to switch suppliers.

The price cap is described as an “interim” measure ahead of a roll-out of smart meters by 2020. These will give customers the opportunity to choose either pre-payment or standard billing options. Because the technology is cheaper, they should also act to drive down prices.

However, Ofgem has been accused of not doing enough to force the so-called “big six” energy suppliers to treat customers better, especially in regard to those on standard tariffs that do not represent the best deal on the market.

A database, also proposed by the CMB, will be set up of such customers next year to allow rival providers to pro-actively target them with better offers, reports The Guardian.

Ofgem is also to force companies to include messaging on bills and other correspondence with customers highlighting the benefits of shopping around and switching to another provider.

First Utility managing director Ed Kamm said: “We are in real danger of continuing to fuel a ‘tale of two markets’ – helping those who already shop around and doing little to properly help those who are continuing to pay much more than they need to or should.”

Republished from The Week