Ofgem is calling on energy companies to treat prepayment meter (PPM) customers fairly.
It found around 40% of suppliers charge up to £180 for PPM installations and 5% charge £160 to remove them.
The regulator also revealed although 40% of companies don’t charge security deposits when customers wish to pay by standard credit or direct debit, the rest charge around £211 on average.
Ofgem said it will work with suppliers to get rid of installation and removal charges as the costs could put many people off from switching.
Removing the barriers could help consumers save up to £300 a year – by switching payment methods from PPM to direct debit, it added.
Around 15% of all energy consumers in the UK currently use PPM, with the average dual fuel bill last year standing at £1,266.
As many as 300,000 new electricity PPMs and 320,000 new gas PPMs were installed in 2014.
Last month Ofgem announced it would look into “reasons behind the increase in the number of PPMs installed for non-payment of debt on a warrant visit”.
Philip Cullum, Partner at Ofgem said: “Ofgem is concerned that charges and costs for using a PPM fall on those least able to afford them. That’s why we want to remove barriers, deliver greater protections and offer more choice for prepayment customers to ensure they’re able to find the best possible deals. We are calling on suppliers to work with us to abolish charges as soon as possible.”
A new survey revealed energy customers collectively owe suppliers £507 million.
Energy UK said the industry is “committed to delivering fair and competitive services and tariffs” to all its customers.
Chief Executive Lawrence Slade added: “The industry has pledged to work constructively with government and regulators and will work closely with Ofgem so customers using prepayment meters get the best deal possible.
“Prepayment meters can help customers manage their finances and can help people who have experienced problems get on top of paying their bills. Suppliers are constantly reviewing their tariffs. We urge customers to shop around for the deal that suits them best.”