Business · Energy & Commodities · 3 hrs ago
Ofgem considers charge on suppliers to reduce risk of energy firm failures
Ofgem, Great Britain’s energy regulator, is consulting on bringing back a charge between energy suppliers.
It could apply when wholesale prices fall by more than 10%, requiring suppliers that attract customers with cheaper deals to pay rivals 85% of the price drop.
Ofgem says the measure aims to reduce the risk of suppliers going bust if many customers switch while other firms have already bought energy at higher prices.
The charge was last used from April 2022 to March 2024, after Russia’s invasion of Ukraine sent wholesale prices soaring and more than 30 energy companies failed.
Consumer campaigner Martin Lewis argues it could make cheaper switching deals less attractive by limiting how much savings new suppliers can pass on.
Ofgem says switching the mechanism back on would not automatically create charges or raise customer bills.
Its consultation is seeking views on how the charge should work, including when it would start and stop.
Ofgem has opened a consultation on bringing back a charge that would require some energy suppliers to compensate rivals when wholesale prices fall sharply.
The regulator says the market stabilisation charge could reduce the risk of suppliers failing during a volatile winter.
The proposal would be triggered if wholesale prices fall by more than 10%, with suppliers winning customers through cheaper deals paying rivals 85% of the wholesale price drop.
Consumer campaigner Martin Lewis says the charge could make deals more expensive and deter customers from switching.
The charge was last active from April 2022 to March 2024, after more than 30 energy companies failed amid soaring wholesale prices.
- Who
- Ofgem, the energy regulator for Great Britain, is consulting on the proposal.
- What
- It proposes reintroducing a charge for suppliers that attract customers with cheaper deals when wholesale prices fall sharply.
- When
- Ofgem published the consultation on October 16, 2026.
- Where
- Great Britain.
- Why
- Ofgem says the measure could reduce the risk of suppliers failing amid wholesale price volatility.
Ofgem
Martin Lewis
Consumer protection
Ofgem
Ofgem says the charge could help protect consumers from market instability and the costs and disruption that supplier failures can cause.
Martin Lewis
Lewis says it could lead to more expensive deals for consumers.
Competition
Ofgem
Ofgem says the charge supports responsible energy purchasing during significant price volatility.
Martin Lewis
Lewis calls it a switching penalty that could dampen competition and says the supplier market is stable.
Ofgem last activated the market stabilisation charge.
Ofgem published a consultation on reintroducing the charge.
About 22 million homes are paying the equivalent of £1,723 a year for typical gas and electricity use.
- Trigger
- Wholesale prices fall by more than 10%
- Compensation
- 85% of the wholesale price drop
- Last active
- April 2022 to March 2024
- Supplier failures
- More than 30 energy companies went bust during the previous period of soaring wholesale prices
- Typical annual bill
- £1,723 for about 22 million homes from October to December
3 sources
What people are saying
We’re preparing for what is likely to be a difficult winter for many households
The cheap fixes and switcher deals offered will be a lot more expensive, in order to protect energy firms’ profits. It ain’t good for consumers.