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Issue 671 | CMA PPM

Issue 671 | CMA PPM

Tom Andrews Tom Andrews Senior Analyst

CMA: Prepayment Charge Restriction Order 2016 20 December 2016 1          Assessment and recommendation On 7 December the Competition and Markets Authority (CMA) published its final Order on The Energy Market Investigation (Prepayment Charge Restriction). The Order implements the CMA’s proposals on caps to how much customers with prepayment meters (PPM) may be charged. Ofgem will set three Relevant Maximum Charges (RMCs) – for single-rate electricity and gas, and Economy 7 electricity, – over six-month periods. These will begin 1 April 2017 and end 30 December 2020, including a final three-month period. These will vary according to the 14 Charge Restriction Regions (CRRs), which follow the electricity distribution regions. PPM charge caps will not apply to customers with SMETS2 meters as the CMA assesses that these will provide PPM customers with access to better deals; the end of the charge cap period is therefore aligned with the completion of smart meter roll-out. All domestic electricity and gas suppliers should take note of the contents of the Order and prepare for implementation on 1 April 2017. This is a matter of increasing concern to Ofgem and non-compliance is likely to be a targeted area. 2         Further Background On 26 June 2014, Ofgem referred the UK energy market to the CMA for a market investigation. Having conducted a State of the Market Assessment, the regulator suspected that features of the energy market were preventing, restricting or distorting competition. Having received evidence from stakeholders, the CMA unveiled its finalised remedies in ...

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