Millions of people may see their energy bills cut under new reforms — but there’s a catch

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As with banking, a lot of gas or electricity customers suspect they’re being ripped off but are too busy or confused to find better deals. Up until now energy companies have known this, and have charged accordingly.

But now the Competition and Markets Authority (CMA) has proposed a cap on payments for all households using pre-paid meters.

The CMA estimates there are four million homes on pre-paid tariffs which need protection until “smart meters” — a new kind of gas and electricity meter able to send energy readings to your supplier — are rolled out in 2020.

The CMA says individual customers could save “over £300” by switching to an energy company’s competitor, and that the UK has been paying “£1.7 billion more than it would in a competitive market.”

While this will sound like good news to anyone on a pre-paid plan, it comes at a price.

In order to achieve this “competitive market”, the CMA has recommended to OFGEM, the UK’s energy regulator, that pre-paid customers are kept on a database for three years, which can be viewed by all energy companies.

This means any customer on the database will be subject to aggressive marketing, something they may not want but will have actively opt out of.

The CMA says the OFGEM database “will be subject to strict safeguards so that customers can opt out at any time and to ensure that communication meets strictly-controlled criteria,” however it doesn’t specify what those safeguards are.

Customer dissatisfaction with energy company service and communication is nothing new. In 2014 a Which? survey showed that 5.5 million customers of the “Big Six” energy firms were unhappy. The “Big Six” consists of British Gas, EDF Energy, npower and E.ON UK, Scottish Power, and SSE.

While the four million customers on pre-paid tariffs will certainly enjoy the news of a price cap, their details being more available than ever before may not be so appreciated.

Roger Whitcomb, who oversaw the report, was asked on the BBC Today programme about the danger that these customers will be flooded with junk mail.

“There will be safeguards for that because we don’t want people being bombarded with junk mail. We’ve talked to the information commission. We’re confident that it’s a really bold move that will allow suppliers to get to that part of the market that may not even be aware that they can switch.”

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