Martin Lewis hits out at plans to introduce new energy bills ‘penalty’
Martin Lewis has criticised Ofgem proposals to make energy suppliers compensate a customer’s former supplier when they switch, warning that the measure could weaken competition and make cheaper tariffs less attractive. Ofgem says the proposed market stabilisation charge is intended to protect suppliers from sharp falls in wholesale prices and help maintain a resilient market through a volatile winter.
The regulator is consulting on reintroducing the measure, potentially from November; it was previously used from April 2022 to March 2024 after Russia’s invasion of Ukraine. Ofgem says payments would apply only if wholesale prices fell sharply and that reactivation would not automatically increase bills. Lewis argues suppliers are less at risk of collapse than during the earlier energy crisis, and says the charge could reduce the savings available to people who switch.
- Martin Lewis warns Ofgem’s proposal could curb competition.
- The charge would apply between suppliers if wholesale prices fell sharply.
- Ofgem is consulting on a possible return from November.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Ofgem’s strongest case is that when wholesale prices fall sharply, customers switching away can leave their former suppliers carrying the cost of energy bought earlier at higher prices. A temporary charge could share some of that risk, support supplier stability through a volatile period and reduce the chance that failures ultimately disrupt customers or burden the wider market.
The case against
Lewis’s strongest case is that a charge on switching could blunt the incentive to seek a cheaper tariff, weakening competition and reducing savings for households. He also argues that suppliers are less exposed to collapse than during the 2022 crisis, so restoring the measure may impose costs on consumers without enough benefit to justify them.