Ofgem consults on bringing back charge for cheap energy deals
Ofgem has published a consultation on a proposal to reintroduce the market stabilisation charge, a mechanism for energy suppliers. Under the proposal, suppliers that win customers with cheaper deals could be forced to pay a charge to rival suppliers. The Guardian
The charge would not apply at all times. It would be triggered if wholesale energy prices fall by more than 10%. When triggered, a supplier signing up customers on cheap deals would have to compensate rivals for 85% of the drop in wholesale rates.
The mechanism has been used before. It was last activated between April 2022 and March 2024.
Ofgem said the consultation is seeking views on trigger levels, notice periods and deactivation arrangements for the charge. It said reactivating the charge would not automatically create charges or increase customer bills.
The proposal relates to household energy costs in England, Scotland and Wales. About 22 million homes are paying £1,723 a year for typical gas and electricity use between October and December, up from £1,663 for July to September.
Reuters reported on 16 October 2026 that Ofgem had launched the consultation. Reuters According to that report, the consultation on activating the charge aims to protect energy suppliers from wholesale price swings.
