Ofgem seeks views on extending the price cap for pre-payment customers

Energy customers on pre-payment meters are still on a raw deal for energy supply because technical barriers continue to constrain competition and choice, according to Ofgem. A Competition and Markets Authority review last year also found that the conditions of competition in the prepayment segments had not improved materially since the introduction of a price cap for such customers in 2017 and their levels of overall market engagement were still low.

The regulator has decided that such customers will continue to require protection after their current price cap arrangements finish at the end of 2020 and it has given stakeholders just a month to respond to an initial consultation on how to take it forward.

Rather than maintaining a dedicated tariff cap for pre-payment customers, Ofgem proposes to combine it with the default tariff cap. The regulator has already aligned the methodology for setting the two caps, but it says it would have to set the cap at a different level for pre-payment customers.

It has asked for views on whether to use the default cap, how to set the cap level, and how to handle various costs such as the pass-through costs of smart meters.

See the consultation here.

A statutory consultation will follow in May.