Some of the poorest people in the UK are “struggling to heat their homes and keep the lights on” as they pay hundreds of pounds more using pre-pay meters, Citizens Advice has warned.
The charity said energy customers using the meters were more likely to be on lower incomes but paid £226 a year more on average than those on the cheapest direct debit deals.
It has now called on the Competition and Markets Authority (CMA) to address the “unfairness in the energy market”.
The regulator is due to publish its interim findings on Tuesday following a year-long investigation in to the energy industry.
Citizens Advice chief executive Gillian Guy said: “Prepay energy consumers get a raw deal.
“Our research shows many pre-pay meter customers have to fork out hundreds of pounds more than those on online direct debit deals. This unfairness leaves some of the poorest people struggling to heat their homes and keep the lights on.”
Ms Guy said some suppliers have promised to improve their pre-pay meter offers but “there is still a long way to go”.
She added: “The CMA investigation provides an opportunity to overhaul the energy industry and make it fairer - giving pre-pay meter customers a better deal is a crucial part of this.”
Citizens Advice said Ofgem figures showed 80% of households with pre-pay meters installed were already in debt. Users pay for their electricity or gas in advance, by topping up cards or buying tokens.
Co-operative Energy, which had the widest gap of £405, responded by saying it was cutting its pre-payment rates.
The company said: “Following contact with Citizens Advice, we have taken the opportunity to review our dual fuel pre-payment tariff and will be reducing it to match the cheapest of the Big Six rates immediately.”
Some 214 Co-operative Energy customers were on a “pre-pay dual fuel tariff” and the firm have “never actively sought to attract pre-payment meter customers, promote or advertise this facility”, it added.