LONDON (Reuters) - Britain’s competition watchdog said on Wednesday that energy regulator Ofgem should continue to protect people who pay for their energy upfront beyond 2020.
In 2016, the Competition and Markets Authority (CMA) said UK retail gas and electricity markets were not working well for customers and imposed a restriction on the unit rate and standing charge for tariffs available to domestic customers on prepayment meters until 2020.
The cap was intended to cut prepayment customers’ bills by around 300 million pounds ($365 million) a year.
The CMA began to review the cap at the start of this year, taking into account the speed and scale of smart meter roll-out and costs incurred by energy suppliers.
Smart meters, which provide more accurate and timely data on energy usage, are intended to replace prepayment meters.
“(The review) now recommends that Ofgem should continue to protect prepayment customers once the CMA’s cap expires, given that the full roll-out of smart meters will not have completed by 2020,” the CMA said in a statement.
It did not say how long the cap should be extended.
The CMA also said the cap needed to be re-calculated to take into account changes in the energy market in the past six months, which will come into effect on Oct. 1.
This will result in an increase to the cap price, with prepayment customers paying around 1 pound a week more.
“A price cap set too low may lead to suppliers leaving the market, reducing both competition and consumer choice. Even with revised level of the price cap, prepayment customers will still be protected from unnecessarily high prices,” the CMA said.
Reporting by Nina Chestney; Editing by Susan Fenton and Mark Potter