January 31, 2019 / 11:22 AM / 3 months ago

UK's competition watchdog to review prepayment meter cap

FILE PHOTO: The new polymer 5 pound Sterling note featuring Sir Winston Churchill, is unveiled at Blenheim Palace in Oxfordshire, Britain June 2, 2016. REUTERS/Joe Giddens/Pool

LONDON (Reuters) - Britain’s competition watchdog is reviewing whether it still needs to cap charges for prepayment meter customers, it said on Thursday.

The Competition and Markets Authority (CMA) said in 2016 that UK retail gas and electricity markets were not working well for customers and it imposed a restriction on the unit rate and standing charge for tariffs available to domestic customers on prepayment meters until 2020.

The restriction, intended to cut prepayment customers’ bills by around 300 million pounds a year, was subject to a mid-term review starting in Jan. 2019. The review will take into account the speed and scale of smart meter roll-out and costs incurred by energy suppliers.

“The CMA considers that the review represents a strategic priority as energy markets remain an important area for consumers and hence the CMA,” it said in a statement.

“Prepayment meters are often used by vulnerable consumers, and it is appropriate for the CMA to continue to focus on this area and ensure these customers continue to be protected in an effective and proportionate way and without creating unintended consequences for consumers or competition,” it added.

Britain’s big six energy suppliers are SSE, Iberdrola’s Scottish Power, Innogy’s npower, E.ON, Centrica and EDF’s EDF Energy.

Due to government concerns about rising household energy bills for consumers, energy market regulator Ofgem imposed a cap from Jan. 1 this year on the most commonly used default tariffs.

That is also subject to review, taking into account any changes in wholesale prices and other costs, with the first to take place in February and any changes to take effect in April.

Reporting by Nina Chestney; Editing by Elaine Hardcastle

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