Published On: Tue, May 14th, 2024
Business | 4,757 views

Ofgem energy bills alert over proposals to scrap ban on cheaper deals for new customers | Personal Finance | Finance


Ofgem is mulling over an early end to the ban on cheaper energy tariffs for newcomers, potentially shaking up the market from October. The regulator is considering a move that could see the return of acquisition-only tariffs exclusive deals designed to entice new customers with lower prices.

Initially set as a temporary measure in April 2022 to shield consumers amidst the energy crisis, the prohibition was expected to be lifted in March next year. However, Ofgem now believes it’s time to reassess this restriction as signs of market stabilisation emerge.

The watchdog argues that axing the ban could reignite competition among suppliers, leading to improved pricing and customer service. MoneySavingExpert.com’s Martin Lewis has weighed in, saying: “The energy market is broken. We need anything possible right now to stimulate competition and bring prices down.”

“In normal times, I wouldn’t call for firms to be allowed to offer new customers cheaper prices than existing, yet these aren’t normal times.”

“The current UK retail energy system was built on the premise that firms would fight each other for customers and compete on price yet that’s hardly happening. Most firms are currently happy to sit on their existing customers and profit where once you could switch and save 30 percent, now it’s a few percent at most. So, in reality, the Energy Price Cap, set up as a remedial backstop rate, is now pretty much the price.”

Richard Neudegg, director of regulation at Uswitch, commented: “Getting rid of the ban on acquisition-only tariffs in October heralds good news for households seeking cheaper energy bills.”

“With a final decision from Ofgem due in July, this move is a no-brainer to improve the chances of decent fixed deals in time for winter.”

“Forcing providers to offer the same energy deals to new and existing customers has meant that suppliers have been encouraged to give up delivering cheap deals.”

“But with the price cap changing every three months, consumers desperately need good value fix options to give them more certainty on their bills. It makes complete sense for Ofgem to remove the piece of regulation that is actively holding this back.”

“Removing the ban will incentivise providers to work harder to compete for customers on price, service and choice.”



Source link