Overview
- Ofgem launched a public consultation on Friday to examine reactivating the Market Stabilisation Charge as a tool to reduce supplier insolvency risk during volatile gas and power markets.
- Under the proposal, a supplier that wins a switching customer would pay compensation to the supplier that bought energy for that customer if wholesale prices drop enough to cause losses, with a reported trigger of more than a 10% fall below the price cap.
- Ofgem stresses the charge would not automatically raise household bills and says payments between suppliers would only occur if wholesale prices fell sharply, with Neil Kenward warning the regulator is preparing for a difficult winter.
- Critics including Martin Lewis say the MSC would act as a de facto switching penalty, making cheap fixed deals and switcher offers more expensive and reducing the incentive for customers to move between suppliers.
- The measure was used between April 2022 and March 2024 after the Russia–Ukraine shock and is now under review as households already face a recent 4% price-cap rise and forecasts of a larger increase in January, which could heighten the policy’s impact on bills and competition.