Ofgem has announced that customers on pre-payment meters will be protected by an interim price cap in response to last month’s recommendations of the Competition and Market Authority (CMA).

The CMA’s two-year investigation, which concluded last month, confirmed that two-thirds of households are disengaged and paying over the odds for their energy compared to those who have switched tariff.

Those on pre-payment meters, who are among the most vulnerable and least likely to switch, will be protected by an interim price cap which will save them around £75 a year from next April.

Though the news is welcomed, there are concerns that it does not address the problem of the more expensive standard variable tariffs.

Ofgem says it will work closely with suppliers to help disengaged customers, who remain on expensive standard variable tariffs, to shop around and save money. In particular it will trial more effective prompts on customers’ bills to encourage them to compare tariffs. It says the remedies are aimed at freeing up competition and innovation in the market to drive down bills and improve service for all consumers not just a minority.

Juliet Davenport, chief executive of independent energy supplier Good Energy, said: "It’s a good move from Ofgem to take forward the CMA's proposals to protect PPM customers from being over charged. Consumers deserve a fair and transparent market so they can have confidence in their energy suppliers."

Next year Ofgem is to pilot a database service which will allow suppliers to offer disengaged customers better value deals.