Competition and Markets Authority expected to propose a safeguard tariff that could result in cheaper bills for more than four million households with pre-payment electricity and gas meters.
More than four million households could see their energy bills cut by regulators, under plans to cap prices for vulnerable customers expected to be announced this week.
But the Competition and Markets Authority, which has been investigating allegations of rip-off energy prices for two years, is expected to confirm it has abandoned its original plan of a wide-ranging cap that could have resulted in price cuts for 70 per cent of UK households.
A temporary “safeguard” price cap set by regulators should instead apply to the approximately 16 per cent of households that have pre-payment electricity and gas meters, the CMA is expected to conclude in a provisional decision due on Thursday.
These households are disproportionately likely to be poor or vulnerable, withsome having had a pre-payment meter forcibly installed after struggling with debt.
Yet they are also usually excluded from signing up for the cheapest deals - which could save them up to £250 a year - because of their meter type, and face cost barriers if they attempt to switch back to a standard meter, the CMA has said.
It is thought likely to introduce a cap on pre-payment meter prices, pegged slightly above the level of the best deals available to those with standard meters.
The authority concluded last year that most households in Britain were paying too much for their energy because they were languishing on the standard variable tariffs of the Big Six energy suppliers.
It mooted the idea of intervening to set a price cap for all such customers, but has ditched the plan after facing widespread criticism from consumer groups, energy companies and politicians alike, who feared households would not bother switching at all any more.
Instead, it will unveil plans to attempt to spur more households into shopping around for their energy, including a proposal to share data of some customers between suppliers.
The CMA suggested last year that customers on standard tariffs or who had failed to switch for several years could be put on a databaseto be sent targeted offers by rival suppliers.
It is thought it may have watered down that plan, amid fears it would result in households being bombarded with junk mail, and could instead propose an opt-in system for such marketing.
The best deals in the market are currently about £400 a year cheaper than standard tariffs, research by Which? found last week.
Gillian Guy, chief executive of consumer charity Citizens Advice, said it would welcome “a safeguard tariff to protect the millions of households using prepayment meters”, who had “for too long paid a high price for a second class service”.
But she said it was “crucial” that extra support was also brought in to help vulnerable households with standard credit meters.
Lakis Athanasiou, a utilities analyst at Agency Partners, said he believed the CMA’s recommendations would be a "damp squib” and said another expected change – to lift a restriction on the number of tariffs suppliers could offer – would simply “increase confusion and further disengage” customers who are failing to switch.
By Emily Gosden, Energy Editor