Energy suppliers will continue to be barred from offering exclusive lower prices to new customers, as the regulator Ofgem decides to maintain the ban on acquisition-only tariffs (BAT) to ensure all households can access the best available deals.

Ensuring Fairness for All Customers

The decision follows a statutory consultation in May where consumer groups and the majority of suppliers voiced concerns about lifting the ban. They argued that removing the BAT would lead to an unfair market for inactive switchers, often referred to as the ‘loyalty penalty’, and erode consumer trust.

Campaigners emphasized that the ban also protects millions of customers in debt, who may be unable to switch to a new supplier for months or even years, ensuring they can still access better deals with their current supplier.

Ofgem’s Commitment to Consumer Protection

Charlotte Friel, interim director for consumer protection and retail markets at Ofgem, stated: “We have heard the voices of consumers loud and clear – and we have responded. 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.”

Friel highlighted the strong opposition to short-term cut-price tariffs that exclude existing customers, noting that consumer trust is crucial in maintaining a healthy competitive market.

“Whilst competition is an important part in driving better standards, so too is consumer trust – and it is clear that denying the best deals to all risks undermining the progress we have made to restore confidence in the energy market,” she added.

Background and Future Considerations

The BAT was introduced in April 2022 as a temporary measure to stabilize the energy market during the crisis, eliminating risky short-term discounted tariffs aimed at attracting customers from other suppliers.

With the market showing signs of improvement, Ofgem had initially proposed ending the ban from October 1, 2024, arguing that it could provide more choice for switching customers while the price cap remains in place to protect existing customers from excessive charges.

However, based on feedback from the consultation, the regulator decided to extend the ban until at least March 31, 2025, to better understand its impact on the retail market.

Comprehensive Review of the Energy Sector

Ofgem is conducting a comprehensive review of the energy sector, including a call for input exploring the future of price protection and the suitability of the price cap in an evolving market. The potential role of a permanent ban on acquisition tariffs will also be considered in this future model.

“The regulator will report on its findings in due course,” Friel said, indicating that ongoing analysis and stakeholder feedback will continue to shape the future of energy market regulation.

Conclusion

For now, the retention of the BAT ensures that all energy customers, regardless of their ability to switch providers, will have access to the best deals available, promoting fairness and stability in the energy market.