Three million consumers who use prepayment energy meters are set to see their costs fall later this year.
The energy regulator Ofgem has updated its prepayment price cap, also known as the safeguard tariff. This is designed to prevent vulnerable customers paying too much for their energy.
It says that prepayment customers – who pay using a coin or token operated machine – are often on poor value tariffs because of a lack of competition in this part of the market.
This ruling is expected to reduce bills for around three million households when it takes effect on 1 October 2017.
Based on typical usage the average dual fuel bill is expected to fall by £19 a year, dropping from £1,067 to £1,048. The majority of this saving will be thanks to reduced electricity bills, rather than gas.
Customers with Economy 7 meters may see smaller reductions.
Ofgem originally introduced this price cap in April 2017 and will update the cap every six months.
‘Vulnerable households more likely to be on poor value tariffs’
A statement released by Ofgem says: “The safeguard tariff is aimed at protecting prepayment meter customers, primarily those on poor value standard variable tariffs, from paying too much for their energy.
“This is part of our programme to deliver a fairer, smarter and more competitive market for all consumers.
“These households are amongst those least able to benefit from competition and are more likely to be in vulnerable circumstances.”
Our apologies, the image has been corrected to reflect the meter mentioned in the article.