Ofgem weighs reviving charge on suppliers winning switchers after price falls
Ofgem is consulting on whether to restore a charge that makes energy suppliers compensate rivals when customers switch to cheaper deals after wholesale prices fall sharply. The regulator says the measure could reduce the risk of suppliers failing during volatile conditions, helping protect households from the disruption and costs that follow.
The market stabilisation charge would be triggered by a wholesale price fall of more than 10%, with suppliers gaining customers paying rivals 85% of the drop. It was last in use from April 2022 to March 2024, during which more than 30 energy firms went bust amid soaring prices; consumer campaigner Martin Lewis warned the charge could make cheap deals less attractive. Typical annual bills are now £1,723 for October to December, and Cornwall Insight forecasts a further rise to £1,872 in January.
- Ofgem is consulting on restoring a charge for suppliers winning customers after sharp price falls.
- The charge could be triggered by wholesale prices falling more than 10%.
- Typical annual bills are £1,723, with a further rise forecast for January.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters could argue that when wholesale prices fall sharply, suppliers offering cheaper tariffs may attract customers while rivals remain exposed to higher costs, putting weaker firms at risk of failure. A charge could share some of that transition cost across suppliers, reduce the chance of disruptive collapses and protect households from the resulting costs and upheaval.
The case against
Critics could argue that making suppliers compensate rivals when customers switch dulls the reward for offering cheaper deals and may lead to less competitive tariffs. Consumers facing high bills should be able to move to better offers without a charge designed to protect suppliers from the consequences of market competition; the measure’s previous use also did not prevent numerous firms from failing during the energy crisis.
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Originally published by The Guardian as “Ofgem could force energy suppliers to pay rivals if they lure customers with cheaper deals”.