A group of organisations from across the energy industry have published an open letter calling for the ban on acquisition-only tariffs (BAT) to remain in place.
Representatives from energy suppliers E.On, Octopus Energy, Rebel Energy and SO Energy, as well as public support organisation Citizens Advice, charities Fair By Design and the End Fuel Poverty Coalition, and consumer advisory group Which? co-authored a letter to Ofgem chair Mark McAllister, stating that they “firmly believe that it’s fair that loyal customers are able to access the same products from their supplier as new customers” and therefore believe that the BAT should remain in place.
The letter’s authors demand that Ofgem pause decisions on the BAT until the impact of other recent policy changes can be evaluated. They state that they “strongly urge Ofgem to reconsider this proposal and put on hold any final decision on the future of BAT until the review of the long-term role and design of price protection has concluded”, adding that “this will also allow any direction from the next Government to be taken into consideration”.
The BAT was brought in by the UK energy regulator Ofgem in April 2022, prohibiting energy suppliers from enticing in new customers with short-term discounted tariffs. It mainly served to protect consumers during the energy crisis, when 3.2 million people were left without electricity when they could not afford to top up their prepayment meters. In May, Ofgem opened a consultation on removing the BAT, with a decision expected this month.
In the letter, the organisations argued that “customers need to have greater trust in their energy supplier to help them provide the right solutions for upgrading their home with green technologies”, adding that this “will require deeper and longer term relationships with customers, rather than harking back to a world where success was simply measured by the amount of switching taking place”.
Changes of supplier still high despite BAT
Last month, data from ElectraLink showed that changes of supplier (CoS) had risen by 49% from the previous year. Octopus Energy founder Greg Jackson noted that the data shows switching returning to pre-crisis levels, “illustrating that customers are confident to find the best companies and energy tariffs for them”.
Jackson also argued against Ofgem’s proposal to remove the BAT: “Energy doesn’t need Del Boy deals and hide-and-seek pricing. It needs fair and transparent tariffs, with the energy price cap to protect everyone.”
The new joint letter warns of the risks of reintroducing acquisition-only tariffs, noting that “our very recent history shows the flaws in encouraging below cost unsustainable acquisition only deals by some which contributed to over 30 suppliers going bust”.
Bulb Energy collapsed in 2021 before being taken over by Octopus Energy in December 2022. That same year, a slew of other suppliers went under; 2021 saw the failure of 27 energy firms, including Hub Energy, Green Supplier, Omni Energy, MA Energy and Zebra Power.
The letter also raises concerns that the impact removing the BAT could have on customers with energy debt has been overlooked, pointing out it was not considered in Ofgem’s recent consultation.
Ofgem’s own data reveals that the number of households in energy debt and arrears has risen by 20% since 2023, with 2.3 million households in debt and arrears. The authors of the letter noted that the BAT provides a crucial safety net and route out of energy debt. The letter states that it “ensures that millions of customers in debt, who may not be able to switch to a new firm for months or even years, are able to access a better deal with their current supplier”.
