Energy regulator Ofgem is to extend its prepayment price cap to one million more vulnerable households this winter, saving them £120 a year.
Ofgem added that it will work on extending price protection to at least another two million vulnerable households for winter next year, once the timing of a Government price cap is confirmed.
It follows Prime Minister Theresa May’s announcement of an energy price cap last week, and Ofgem said it will work with the Government so that all customers on standard variable and other “default tariffs” receive price protection “as soon as possible if legislation is in place”.
The Conservatives are expected to publish draft legislation to enforce a cap on some energy prices on Thursday.
Ofgem will consult on the design of a “safeguard tariff” for default deals while the Government’s draft Bill progresses through Parliament.
Dermot Nolan, chief executive of Ofgem, said: “Ofgem shares the Government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.
“The Government’s proposed Bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.”
However, the regulator warned energy suppliers that they must step up efforts to get more customers on default tariffs on to better value deals.
Ofgem is introducing new rules to allow suppliers to roll customers coming to the end of their contracts on to another fixed deal, instead of a poor value standard variable tariff.
It will monitor suppliers to ensure any new default deals do not “become another way to penalise customers who rarely switch”.
The regulator is also proposing that consumers would receive automatic compensation if their switch goes wrong.
Mr Nolan added: “We expect suppliers to do more to get customers on poor value default tariffs on to better deals.
“We also expect suppliers to co-operate when Ofgem initially introduces a safeguard tariff for around one million vulnerable households this winter.
“The introduction of further price protections will give time for Ofgem’s reforms to work and for smart meters to be rolled out across the country as we move towards a smarter, fairer, more competitive market.”