Ofgem's cap on pre-paid meters aims to force energy companies to lower bills

The Competition and Markets Authority has calculated that households and businesses are paying £1.4 billion more for their gas and electricity than they should be.

Ofgem has today set out its response, which it believes will force companies to lower their bills.

There will be a cap on the amount of money companies can charge the four million people who use pre-payment meters, and more encouragement for everyone else to shop around.

So if these reforms do work, you would expect the likes of EDF, Npower, British Gas, SSE, Scottish Power and E:ON to make less money.

But the share prices of some of those companies have barely moved today, rather suggesting investors take the view these reforms won't materially impact on profits - we'll see.

There have been glimpses of consumers flexing their muscles. Last week, British Gas revealed it lost 400,000 customers in the first six months of this year.

Last summer, Npower sacked its chief executive after profits slumped - a sign of punishment for lousy performance.

But if prices are too high, why doesn't the regulator cut them? It's not a power the regulator has or one it seems to want.

The hope is a sudden rush of switching will force the Big Six to treat customers rather better and drop their prices.