Key facts
- Ofgem proposes a market stabilisation charge to protect energy suppliers.
- The charge would be triggered by a wholesale price drop of over 10%.
- Suppliers luring customers with cheaper deals would compensate rivals 85% of the wholesale rate drop.
- The mechanism was previously active from April 2022 to March 2024.
Ofgem, the energy regulator for Great Britain, is considering reintroducing a market stabilisation charge (MSC) to prevent energy suppliers from going out of business this winter. The proposal comes amid concerns about price volatility linked to the conflict in the Middle East. The MSC, previously active from April 2022 to March 2024, aims to protect consumers from market instability. It would be triggered if wholesale energy prices fall by more than 10%, requiring suppliers who attract customers with cheaper deals to compensate rivals for 85% of the wholesale rate drop. Ofgem stated that the charge would not automatically increase customer bills. The regulator is currently consulting on the specifics of the mechanism, including trigger levels and deactivation arrangements. Households are currently facing higher energy bills due to rising wholesale prices, with the average annual cost at £1,723 for the October-December period, and a further increase forecast for January.