Ofgem urged to extend prepayment price cap due to smart meter delays
The competition watchdog has urged Ofgem to extend protection for prepayment consumers beyond the end of 2020 due to the delayed roll-out of smart meters.
The Competition and Markets Authority (CMA) implemented a temporary prepayment price cap in 2017 in a bid to reduce customers’ bills by around £300m a year.
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It came after warnings prepaying consumers were paying more than they should for their energy.
The watchdog recommended this morning that the cap be extended beyond 31 December 2020 as the smart meter roll-out could be up to two years behind schedule.
The CMA said the cap would not be needed once smart meters were introduced as it would give customers greater option and information, and give suppliers incentives to compete for new customers.
Record numbers of households switched suppliers in April after average bill jumped by £117m as Ofgem raised its price cap, according to trade body Energy UK.
More than 668,000 households moved to another provider in the month, a 34 per cent jump year-on-year.
Last month Ofgem confirmed plans to slash energy company returns to save households £6bn over five years.
The energy regulator proposed to set the baseline rate of returns that network companies can recover from customers at 4.3 per cent from 2021 – compared to up to eight per cent under current rules.
Ofgem’s executive director for systems and network, Jonathan Brearley, said: “Our proposals are on track to deliver a tough, fair settlement that strikes a better deal for consumers.
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“Lowering the cost of capital for network energy companies will put money back into consumers’ pockets while service standards are required to remain high.”
He added: “Our new price control for networks will pave the way for a cheaper, smarter and more sustainable energy system and is a key step in our journey to a low carbon future.”