Ofgem consults on ending ban on acquisition-only tariffs

Staff
By Staff
3 Min Read

Ofgem has launched a statutory consultation to explore the removal of the ban on acquisition-only tariffs, which restricts energy suppliers from offering tariffs exclusively to new customers.

The consultation considers two potential timelines for the removal: after six months, starting 1st October 2024, or at the end of the existing extension period on 31st March 2025.

The ban was initially introduced in April 2022 as a temporary measure to stabilise the market during the wholesale price crisis.

This was in response to the market volatility caused by the Russian invasion of Ukraine.

The Market Stabilisation Charge (MSC) was also implemented as part of these measures.

After a review, Ofgem decided to let the MSC expire at the end of March 2024, citing improved market stability and new policies aimed at enhancing supplier financial resilience.

However, a residual risk was identified if the ban on acquisition-only tariffs was removed simultaneously with the MSC.

Ofgem’s current preference is to remove the ban after six months, arguing that this would prompt a quicker return to price and non-price competition, resulting in better price savings and service levels for consumers.

The consultation seeks to determine the most appropriate timeline for the removal while considering market stability and supplier hedging risks.

The consultation also addresses the removal of the Market Wide Derogation for fixed retention tariffs within the same time frame.

The analysis suggests that retaining the ban on acquisition-only tariffs is no longer necessary for market stability and could result in increased costs for consumers.

The price cap will continue to protect disengaged consumers from unfair pricing.

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