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Ofgem considers ‘further action’ on prepayment tariffs

Ofgem has expressed concern over a lack of competitive deals for prepayment customers, and said it is considering whether further action is needed.



New figures released by the regulator revealed energy customer switching increased by 8 per cent in the first three months of 2016, compared with the same period last year.

The data also found that the gap between the average standard direct debit and prepayment tariffs has narrowed to around £70. But while, in theory, there are also savings of around £300 for prepayment meter customers, most of the best deals are only possible if they change meters.

Ofgem senior partner Rachel Fletcher said the regulator was “very concerned” that the data it has published shows that suppliers are still not offering people with prepayment meters the much cheaper fixed deals available to other customers.

“Many PPM customers are vulnerable and it concerns us that they are losing out,” she said. “The CMA’s proposed prepayment tariff and other measures we are taking would improve this situation, and we are considering whether further action is needed.”

In its provisional findings released last month, the CMA proposed a temporary price control for the 4 million customers on pre-payment meters, pending the full rollout of smart meters and wider reform of the market by 2020. It claims the measure will save PPM customers £300 million a year.

The latest data from Ofgem also showed that 52 per cent of all customers who switched moved to new entrant suppliers, which now make up 13 per cent and 14 per cent of the electricity and gas markets respectively. In March 2016, there were a total of 44 suppliers competing in the market.

Fletcher said: “It’s encouraging to see a continued rise in the number of people switching, and an increasing number of suppliers entering the market.”

The figures follow an Ofgem report in February which showed the number of customers switching energy supplier had reached its highest level since 2011, and was up 15 per cent from 2014.

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BDC 315 : Apr 2024