An energy price cap for two million of the most vulnerable households will be fast-tracked into place by January, under Ofgem plans to be unveiled within weeks.
The industry regulator has told companies that it will press ahead with the idea and may also extend the cap to cover hundreds of thousands more households as it battles criticism that it is failing to protect customers.
Ofgem wants the cap to be in place earlier than the April start date many in the industry had expected, in order to cut bills through the winter.
The plan will fall significantly short of a cap for all 17 million households on expensive standard tariffs promised by Theresa May before the election, reigniting a political row.
Ofgem’s announcement is scheduled before the end of September, putting the ball back in the government’s court before the Conservative party conference at the start of October.
About four million households with pre-payment meters (PPM) are currently covered by a regulated price cap that was introduced last April on the recommendation of the Competition and Markets Authority.
Mrs May vowed in May to tackle “rip-off energy prices” by extending the cap to all standard variable tariffs, in a move she claimed would save households up to £100 a year.
The government has passed responsibility for implementing the plan to Ofgem but the regulator said that such a wide-ranging cap was a policy matter and should be introduced through legislation. Attempting to introduce it through regulation could also be challenged by companies appealing to the CMA, which has rejected the idea.
Dermot Nolan, Ofgem’s chief executive, said in July that it was considering a more limited extension of the cap to protect vulnerable households. It has yet to define the term but it is likely to include about two million homes eligible for the Warm Home Discount.
It is understood that Ofgem is looking at including other categories of vulnerable households such as those receiving cold weather payments. That could increase the number of households included in the cap to almost three million, although not all those may be covered immediately.
The watchdog is also examining how data can be shared from the Department of Work and Pensions to help to identify vulnerable customers.
Ofgem’s plans are likely to face criticism from MPs. John Penrose, the former Tory minister, has accused the regulator of being useless.
Senior industry sources said that they did not expect companies to oppose the limited extension of the cap but that there was likely to be fierce lobbying over its design.
In particular, companies want to make sure it factors in the rising cost of installing smart meters in every home, which the PPM cap does not reflect.
A spokesman for the regulator confirmed the plans, saying: “Ofgem remains committed to taking prompt action to ensure that some of the most vulnerable in society are not left behind as we move towards a smarter, more competitive market.
“We plan to publish a fast-track consultation at the end of next month on our preferred option of introducing a safeguard tariff for vulnerable customers early next year.”
Lawrence Slade, of Energy UK, the industry body, said: “The industry is committed to doing more to ensure the retail market works for all consumers.”