Ofgem makes further cuts in prepayment price cap

It said the tightening of the tariff would cut bills for around 3 million households by up to £19 a year based on typical consumption.

The change, which takes effect on 1 October, will reduce the level from about £1,067 to £1,048 for a dual fuel prepayment customer who uses a typical amount of energy.

Ofgem introduced the temporary safeguard tariff in April this year after the UK's “big six” energy firms all raised prices, prompting sharp criticisms.

The safeguard tariff is aimed at protecting prepayment meter customers, primarily those on poor value standard variable tariffs, from paying too much for their energy, Ofgem said in a statement.

“This is part of our programme to deliver a fairer, smarter and more competitive market for all consumers,” it said in a statement.

“The safeguard tariff applies to households who prepay for their energy, mostly with traditional coin or token operated prepayment meters. These households are amongst those least able to benefit from competition and are more likely to be in vulnerable circumstances.”