Members of the energy sector have responded to regulator Ofgem’s announcement that the ‘ban on acquisition-tariffs’ (BAT) will be extended for 12 months.
The ban, introduced as a temporary measure in April 2022, prohibits the use of short-term discounted tariffs which aim to incentivise customers to move to new suppliers.
Considering the time frame in which the BAT was brought in, its main purpose was to provide stability for customers at the peak of the energy crisis.
Ofgem has said it is open to views and feedback about shortening this extension to six months.
So Energy’s interim CEO and co-founder, Simon Oscroft, called this extension “another kick in the teeth for energy customers after a bruising few years”. He argued that the BAT is “unfair for customers”, and the company’s recent survey indicated that nine in ten existing energy customers want to access the same tariffs as new customers.
Oscroft added: “When the BAT is removed, suppliers will be free to hide their best deals from their loyal customers. Why shouldn’t they have access to the best deals?
“Loyal customers should not have to call their supplier on renewal and haggle for a deal that they can see the supplier is offering elsewhere.”
On the other hand, Rachel Fletcher, director of economics and regulation at Octopus Energy, has said it is “good” to see the BAT extended and even argued that Ofgem “needs to end them once and for all”.
Fletcher said: “A permanent ban would force suppliers to compete by innovating and driving lower costs – rather than lazily relying on “tease and squeeze” tactics designed to lure customers in on temporary cut-price deals.
“A permanent ban on rip-off tariffs will prevent a return to the wild west energy market – which bamboozled customers and cost them billions in bailing out failed suppliers.”
Announcements in tandem
It is important to note that, as part of the same announcement in which the extension was declared, Ofgem also said it would be ending the Market Stabilisation Charge (MSC) from 1 April 2024.
The removal of the MSC, a measure introduced at the same time as the BAT, means that suppliers are no longer required to compensate a new customer’s previous supplier when they switch and was part of the decision to extend the BAT.
In order to try and maintain a steady and stable return to a more normal market after the energy crisis, Ofgem has decided that it is best to phase out the removal of temporary measures like BAT and MSC instead of a ‘cold turkey’ approach.
Both these changes were announced as part of Ofgem’s quarterly price cap update, which reported that the Default Tariff Cap will be set at £1,690 for the average dual fuel household paying by direct debit.
