Four million vulnerable households using prepayment gas and electricity meters could face higher bills under plans to tweak the energy price cap.
A proposal from the Competition and Markets Authority risks raising bills by changing how the prepayment meter cap is calculated.
The plan would ease the financial burden on energy companies by including more of the costs faced by suppliers, but will raise bills for homes using prepayment meters, which are typically more vulnerable.
A CMA spokesperson said the proposal “strikes the right balance between protecting vulnerable consumers and ensuring energy suppliers are still able to operate and compete”.
The change is expected to raise bills by less than £1 a week for a dual-fuel prepayment customers, who pay an average of £1,242 a year.
Energy UK, which represents energy suppliers, said prepayment customers would benefit from a market in which companies can compete and innovate.
“Our sector is genuinely committed to going further to improve services for all customers, particularly those in the most vulnerable circumstances,” it said in a statement.
However, Peter Smith from the campaign group National Energy Action warned the proposal could “heap further misery on these customers, who could face yet more rises later this year”.
Smith said the cap calculation meant vulnerable customers would shoulder a larger share of the “escalating” costs of the smart meter rollout, “without having any or [only having] very limited access to the potential benefits of smart meters”.
A limited number of energy suppliers offer smart meters to prepayment customers.
Due to the smart meter rollout delays, the CMA has proposed the prepayment cap should remain in place after 2020, when it was originally expected to fall away in line with the rising uptake of the meters.
Smith said Ofgem must “redouble and accelerate efforts” to make sure vulnerable prepayment meter customers “are the number one priority for the smart meter programme”.
The competition watchdog capped the average energy tariff for prepayment meters more than two years ago, following an investigation of the energy market that found suppliers were overcharging customers.
Since then, the energy regulator has developed a more detailed calculation that it uses to cap prices for about 11 million homes that use standard variable energy tariffs rather than cheaper fixed-price deals.
