In a move aimed at fostering competition among energy suppliers, Ofgem has put forward a proposal to expedite the removal of a ban on energy companies offering discounted deals to new customers.
The proposed action, slated to potentially take effect from October, could pave the way for customers to access better deals from alternative providers this winter.
Initially introduced as a short-term measure in April 2022 to safeguard consumers during the energy crisis, the ban on acquisition-only tariffs was scheduled for removal in March of the following year. However, Ofgem now contends that the time is ripe to reconsider this restriction as the energy market rebounds.
According to the regulator, lifting the ban would facilitate a quicker return to competition, leading to enhanced price savings and service standards for consumers.
The consultation initiated by Ofgem explores two potential timelines for the ban’s removal: either six months from October 1, 2024, or at the culmination of the existing extension period on March 31, 2025. The objective is to ascertain the most suitable timeline, considering market stability and suppliers’ hedging risks.
Martin Lewis, founder, and chairman of Money Saving Expert, acknowledged the imperative of stimulating competition in the energy market, particularly amidst prevailing challenges. He emphasized the need for innovative measures to bring down prices, given the current market dynamics.
The proposed removal of the ban has garnered mixed reactions from industry experts. Richard Neudegg, director of regulation at Uswitch, expressed optimism about the potential benefits for households seeking reduced energy bills. Conversely, Simon Francis, coordinator of the End Fuel Poverty Coalition, voiced concerns about the prospect of discriminatory tariffs resurfacing, urging Ofgem to reinforce consumer protections.
Should the ban be lifted, households stand to benefit from increased competition among suppliers, potentially leading to more favorable energy deals. However, ensuring equitable access and safeguarding consumers against discriminatory pricing practices remain paramount considerations for regulatory authorities.