Low-income households that tend to comprise the bulk of pre-payment energy customers are missing out on average savings of £100 a year by not being able to switch supplier, according to the energy regulator Ofgem.

This is a significantly higher saving than direct debit customers could achieve by switching, the regulator added.

However, the pre-payment energy sector has always been seen as expensive by analysts and consumer groups, and suppliers have made it hard for these customers to switch.

“Pre-payment customers should take advantage of the competitive market if they are to see further falls in their energy bills,” said Alistair Buchanan, Ofgem chief executive.

“By changing supplier they can save on average around £100. But in some regions this can be as great as £170 a year,” he added.

Energy analyst Paul Windsor said: “Like many other markets, the more money you can bring to them the wider your choice of goods and services. Pre-payment energy customers lose out big time on the benefits of switching because the economic disadvantage suffered by many means they have restricted choice.”

Four million UK households spend more than 10% of their income on energy and are defined by this financial benchmark as ‘fuel-poor’. Many of these households tend to use pre-payment meters.