The energy regulator Ofgem has announced a limit for customers using pre-payment meters in the UK.

The price cap, which comes in to force from April 2017, will last until the end of 2020. By this time it’s expected that the roll-out of smart meters, which can help prepay customers access better deals, should be complete.

The levels of the price limit will vary for each energy type (electricity/ gas) by meter type and region. Ofgem has estimated that customers will see reductions of up to 15% on bills, which is around £80 a year based on typical household consumption.

Customers on pre-payment meters normally face higher costs compared to those who pay by direct debit. Analysis by Citizens Advice in 2015 showed pre-pay customers spending on average £226 more per year.

“We want all consumers to enjoy the benefits of a more competitive energy market, regardless of their circumstances. Customers who prepay for their energy are denied the best deals on the market available to those using other payment methods. They are also more likely to be in vulnerable circumstances, including fuel poverty. This temporary cap will protect these households as we work to deliver a more competitive, fairer and smarter market for all consumers.”

Dermot Nolan, Chief Executive, Ofgem

Smart meters are available through your energy supplier and can help you to monitor the energy you use in real time. You can find more details on the Smart Energy website.