Four million customers on prepayment energy meters are expected to save around £80 a year after a price cap was announced by energy regulator Ofgem.

The temporary price cap, which comes into effect in April, was one of the measures recommended by the Competition and Market Authority after its two-year investigation of the energy market. The levels of the cap vary for gas and electricity by meter type and region. It will be updated every six months and is expected to stay until 2020. That is when the roll-out of smart meters is set to be completed, which will benefit prepayment customers who have a smaller choice of tariffs available to them. However, there have been some concerns about the roll-out of the smart meter programme.

'Vulnerable circumstances'

Many prepayment meter customers pay through token or coin operated machines. Some of these customers may have had difficulties paying in the past. Others include some tenants whose landlords have the meters installed in properties. Competition among suppliers for prepayment customers is less developed than for those who pay by direct debit, cash or cheque, according to Ofgem. This means that there are fewer tariffs available and they are generally more expensive.....Read more here