Energy regulator Ofgem confirmed today (30 July) that it will retain the ban on acquisition-only tariffs (BAT) following a consultation phase.
Acquisition-only tariffs are a way for energy suppliers to entice new customers to move suppliers by offering them cheaper prices. A ban was enforced in April 2022 to protect consumers during the energy crisis, which left 3.2 million people without electricity.
The regulator said it has decided to retain the BAT to “better understand its impact on the retail market”. This is following a consultation phase, which included “concerned consumer groups and the majority of suppliers demanding fairer treatment for existing customers”.
Ofgem’s BAT consultation was primarily to identify whether to end the ban early, starting on 1 October 2024. A second potential removal date was identified for the end of the existing BAT extension period, on 31 March 2025.
The regulator emphasised that the long-term future of the BAT will be examined as part of Ofgem’s comprehensive review of the energy sector. Ofgem is currently reviewing responses to a call for input that explores the future of price protection.
This includes assessing the suitability of the price cap in a changing market and the potential impact of permanently banning acquisition tariffs in the future energy model.
Ofgem added that it will report on its findings in due course.
Commenting on the decision to retain the BAT, Charlotte Friel, interim director for consumer protection and retail markets at Ofgem, highlighted that whilst competition is an important part of driving better standards, it is clear that “denying the best deals to all risks undermining the progress we have made to restore confidence in the energy market”.
“We are committed to acting in the best interest of all customers and the feedback we get from the public, industry, consumer groups and charities is vital in shaping the work we do. The responses we received showed a strong strength of feeling against short-term cut-price tariffs that shut out a supplier’s existing customers,” Friel added.
“Customers have the right to vote with their feet and switch suppliers for better service, or more support, but retaining the BAT will mean that they don’t have to keep moving to chase the best rate.”
Retaining the BAT is a ‘sensible decision’
The decision to maintain the BAT has prompted several responses from across the energy industry. Energy UK’s deputy chief executive, Dhara Vyas, believes the retention of the BAT is a “sensible decision” given its role in providing reassurances for customers during a turbulent time.
“There have been positive signs in the retail market over recent months – we are seeing fixed tariff offers returning to the market as well as an increase in switching. While the BAT has been an effective measure, it is also right that Ofgem is looking beyond switching as a way to measure engagement with energy. Focusing solely on short-term price competition fails to see the important roles customer loyalty and non-price competition can play in a fair and competitive retail market,” Vyas added.
Gillian Cooper, director of energy at Citizens Advice, echoes Vyas’s thoughts, adding that the “decision will provide some certainty to the millions of customers worried about their energy bills and who rely on a stable energy market”.
“Ofgem’s taken an important step towards fairer pricing and higher standards in the energy market and we’ll be keeping a close eye on how this affects consumers.”
Rachel Fletcher, director of economics and regulation at Octopus Energy stated that the retention of the BAT is reassuring asit proves Ofgem has “listened to consumers”.
“We welcome Ofgem’s decision to now look at permanently banning these unpopular and risky tariffs which lock the majority of loyal customers out of their suppliers’ best deals, and led to billions of pounds in losses and contributed to the collapse of a number of energy companies,” Fletcher said.
