Ofgem could force energy suppliers to pay rivals if they lure customers with cheaper deals
Summary
Ofgem, the energy regulator for Great Britain, may bring back a fee called the market stabilisation charge (MSC). This fee would make energy companies pay other suppliers if they attract customers with cheaper deals during times when energy prices drop a lot, to help keep suppliers from going bankrupt this winter.Key Facts
- Ofgem is consulting on whether to restart the market stabilisation charge (MSC).
- The MSC was used last from April 2022 to March 2024 during high energy price volatility from the Ukraine war.
- The MSC would apply if wholesale energy prices fall more than 10%.
- Suppliers who gain customers by offering cheap deals would pay rivals 85% of the wholesale price drop.
- This rule aims to stop suppliers from losing money and going out of business when customers switch deals.
- The energy price cap has increased, leading households to pay about £1,723 for typical gas and electricity between October and December 2023.
- Energy bills are expected to rise again in January 2024 by about £149 per year on average.
- The UK government plans to help poorer households with energy costs in an upcoming budget.
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