The energy giant said it is the first to cut prepayment prices ahead of an industry-wide move from July as the supplier wants to make it “the cheapest way to buy energy in the UK”.

It follows an announcement in the Spring Budget that energy firms will be banned from charging households with prepayment energy meters more than those paying by direct debit.

British Gas said average dual fuel prepayment meter customers will save £59 a year as it looks to pass on savings of “well over £10m” to these customers over the next three months.

The reality is that the savings are on gas only, as prices will fall from £1,403 to £1,343 from tomorrow, while electricity customers pay slightly cheaper rates than those on direct debit, with no change to prices of this fuel.

Here’s a breakdown of the savings:

Prepayment controversy

Prepayment meters have come under intense scrutiny in recent months after an investigation claimed that third-party agents used by British Gas broke into the homes of vulnerable customers to install the meters.

Energy suppliers were forced to halt forced prepayment meter installations last month after the regulator Ofgem said it needed to clarify rules and guidance in this area.

Suppliers subsequently agreed to stop installation by warrant, remote switches without the explicit agreement from the customer, and cease new applications to court for installation warrants, unless theft is suspected.

The ban has been extended indefinitely until Ofgem’s new code of practice in this area is published and suppliers abide by the rules.

‘Do more to support customers’

Chris O’Shea, CEO of Centrica, parent company of British Gas, said: “We know that more help is needed for prepayment customers, and we support the Government’s decision to lower prepayment prices to the same level as direct debit customers. We wanted to do more to support this group of customers by introducing this change as soon as we could so British Gas prepayment customers will benefit immediately.

“As well as helping over 650,000 customers in the past year with much-needed support such as credit on their meters and cash grants, our teams are giving expert advice at this busy time to help guide people through this crisis. Our call centres are helping around a million energy customers each month with their bills and our engineers are in homes every day advising customers on how to be more energy efficient and make savings.”

British Gas added it has a £10m customer support fund specifically for prepayment customers struggling to pay their bills which has been providing non-repayable credit up to £250 on prepayment meters this winter – with £5m already paid to 50,000 prepayment customers.