Chancellor Jeremy Hunt will announce an end to the “pre-payment meter penalty” during his spring Budget on Wednesday, ending higher charges for often low-income households.
Pre-payment meter customers will no longer be billed for more than those paying by direct debit under the £200mln plan, which is set to save households around £45 each, the Treasury estimates.
“It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that,” Hunt said.
“From July, four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.”
Changes will be managed under the government’s energy price guarantee, which caps the amount households pay per kilowatt of power, though support through the scheme is set to be cut in April.
Regulator Ofgem will then be consulted on how changes can be made permanently, reducing costs, which suppliers claim are higher for managing households on pre-payment meters.
Bosses from British Gas owner Centrica PLC (LSE:CNA) and Ofgem are to face MPs this week after the former was found by the Times to be force-fitting pre-payment meters in vulnerable households in February.
Pre-payment meters have become a hot topic as a result, with many energy suppliers having fitted them into homes to shield themselves from debt, racked up when households can't pay, which sat at £1.9bn in December before forced installations were banned last month.