CMA to extend prepayment tariff cap as smart meter rollout heads for two-year delay

The Competition and Markets Authority (CMA) has decided to keep in place a tariff cap for pre-payment customers, It said ”conditions of competition in the prepayment segments have not improved materially,” and engagement among prepayment customers remains low.

In addition, it noted that the smart meter rollout “has not progressed in line with the initial projections … it is not on track to complete by the end of 2020 and we believe may be as much as two years behind schedule.” As a result it plans to keep the cap in place beyond its original end-date of 2020.

The CMA also highlighted deficiencies in the methodology used to set the level of the cap, saying that underestimating the costs incurred by efficient suppliers meant it was set too low and “this would present the risk that suppliers reduce service levels to prepayment customers, competition is materially reduced, and suppliers may be forced to exit the market.” It proposes usint he same methodology as that used by Ofgem to set its standard tariff caps.

Read the CMA’s full review of the cap

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