British Gas, OVO, EDF, EON, Octopus rules extended meaning another year of expensive bills
Households face ANOTHER year of expensive energy bills under Ofgem rules that limit cheap fixes. It means British Gas, OVO, EDF, EON and Octopus customers face paying above the odds for energy bills until 2026 under the shake-up.
Ofgem rules mean energy firms cannot offer cheaper deals to new customers unless they also offer them to existing ones. The regulator brought in this 'ban on acquisition-only tariffs', or BAT, in October 2022 to stop undercutting.
The BAT has been cited as a reason bills could be as high as they are - with companies given no incentive to offer cheaper rates. An Ofgem consultation on the BAT said: "We acknowledge that removing the BAT could reduce prices for active consumers in the short-term.
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"Our decision to retain it remains a closely balanced one." Richard Neudegg, of Uswitch, said: "Ofgem's own analysis suggests that the BAT softens price competition between suppliers on those fixed deal options, which risks pushing up fixed deal prices to a higher price than they otherwise would be.
"Ofgem's main argument for extending the BAT for another year is that it will promote more trust in the energy market. They seem to believe it's worth risking fixed deals being more expensive than they otherwise would be if more customers can access those deals without switching suppliers.
"We don't think Ofgem has yet found the right balance to strike. Even if it feels like protection, it's not helping consumers if in practice everyone ends up paying more than they otherwise would." But Simon Francis, coordinator of the End Fuel Poverty Coalition, commented previously over the consultation: “With energy debt levels rising due to the record energy prices, now is not the time to allow firms to offer these tariffs, which also disadvantage existing loyal customers and risk creating market instability.”