Gas and electricity prepayment customers to benefit from pricing cap from April
The independent energy regulator for the UK, Ofgem, announced a new prepayment price cap for gas and electricity meters; a move which will benefit up to four million British householders.
The temporary cap will come into effect in April. It will positively effect customers who consume energy on a prepayment card system. According to official figures, around four million people in the UK use a prepay system.
Ofgem claims the prepayment cap will benefit some gas customers to the tune of up to £80 per year, or between 10-15%, when it comes into play on April 1 later this year. Electricity customers could also enjoy annual savings. These could be up to £80.
The energy prepayment cap has been introduced as the CMA (Competition and Market Authority) said prepayment customers were not able to benefit from competitive energy pricing, despite these householders being the most likely to be living in vulnerable conditions.
According to the CMA, energy tariffs for prepayment systems are outdated and are generally more expensive. Competitive prices are more readily available for those paying via credit/debit card, cash, or cheque.
Increasing fairness in the marketplace
The new prepayment cap will hopefully create a fairer market place for all householders, regardless of the payment type.
Dermot Nolan, chief executive of Ofgem, commented: “Customers who prepay for their energy are denied the best deals on the market available to those using other payment methods.”
He added further: “They are also more likely to be in vulnerable circumstances, including fuel poverty. This temporary cap will protect these households as we work to deliver a more competitive, fairer and smarter market for all consumers.”
The temporary prepayment price cap will remain in place until 2020. During this period the Government will also be rolling out smart metres across the UK. Prepayment energy customers will benefit the most from these new metres.
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