Starting October 1, up to three million UK households dependent on prepayment metering solutions for their electricity supply will face a lower cap on the maximum amount that can be charged for a given quantity of electricity.
This policy is in line with a scheme implemented by OFGEM on the advice of the Competition and Markets Authority (CMA) to better reglate energy tariffs for those customers who do not have access to switch providers.
Prepayment utility metering is commonly used in situations where the customer is denied a credit for utility due to late or non-payment as well as to encourage debt repayment to utilities. Affecting over three million households in the UK, this price cap or "safeguard tariff" helps ensure competitiveness for all consumers.
It should be noted, however, that this applies generally to those with older meters installed, and that by 2020 the UK envisions the completion of the smart meter follout for utilities, nullifying the need for this price cap and safeguard.