Under new rules, proposed by the energy regulator Ofgem, energy companies will be banned from charging unfair, or unjustified, prices.
Rates charged, for different payment methods, will have to reflect costs to the supplier. This will apply to pre-payment meters.
The investigation into the state of the energy market was started by Ofgem early in 2008. And the new proposals have been welcomed by experts, who claim that £300 million has already been cut from electric-only and pre-payment tariffs.
The Ofgem Chief Executive, Mr Alistair Buchanan, confirmed that he was determined to see an end to bad practices.
Welcome news for consumers with debt problems
Ofgem said that there was no evidence of collusion between the biggest energy companies, in the early stages of their investigation. They also concluded that the market worked well for most people. They were, however, concerned over the difference in price for consumers paying in different ways, and also people that had no gas supply.
The poorest people in society are generally the ones that pay their bills through a pre-payment meter, and these households were being charged more. Nearly 40% of people living in social housing pay their bills with a pre-payment meter. In 2005, these household were paying an average of £80 more than people that paid by direct debit. By 2008, this figure had risen to over £120.
The news has been welcomed by debt advice specialists, who have confirmed that there has been an explosion in inquiries from consumers looking to get out of debt, entering debt management plans and seeking IVA advice.
The households with the highest level of credit card debt are often the same people that are paying the most for their electricity.
The new rules will mean that suppliers will have to charge consumers realistically for the method of supply, in future. They will also be required to supply a statement including information about consumption, tariffs and the consumers right to switch supplier, as well as easy to understand comparison cards to make a switch easier.
For small businesses, a clear and understandable contract must be supplied with no automatic rollover at the end of the contract.
