The UK’s energy regulator Ofgem has opened a new consultation into the future of the ban on acquisition-only tariffs (BAT).
In July, the watchdog stated its intention to extend the BAT for 12 months beyond its current extension period, lasting until 31 March 2025. As a result, Ofgem is now seeking the views of energy industry stakeholders on the merits of extending the BAT until 31 March 2026. Additionally, the consultation will receive input and views on the potential benefits of extending the BAT’s associated market-wide derogation for the same length of time.
The consultation is open until 9 November 2024; following this, the regulator will issue a further statement on whether it will extend the BAT for another year later in November.
Separate to this, Ofgem is looking for stakeholder feedback on how well the BAT is functioning and what, if any, potential reforms could enable it to operate more effectively in the future.
History of the BAT
Acquisition-only tariffs are a way for energy suppliers to gain more customers by encouraging billpayers to switch suppliers and offering new customers cheaper energy prices. In April 2022, these tariffs were banned to protect energy customers struggling as a result of the energy crisis, when 3.2 million people were left without electricity because they could not afford to top up their prepayment meters.
In February of this year, the regulator announced it would extend the BAT until March 2025 which drew mixed responses from those in the energy industry. SO Energy CEO Simon Oscroft called the extension “another kick in the teeth for energy customers after a bruising few years”, while Rachel Fletcher, director of economics and regulation at Octopus Energy argued for a permanent BAT, noting that “A permanent ban on rip-off tariffs will prevent a return to the wild west energy market”
A consultation was opened in the spring this year that suggested Ofgem may remove the BAT earlier than expected, which drew widespread criticism from the energy industry. An open letter from leading energy industry figures slammed the idea of removing the BAT earl. Executives from energy suppliers E.On, Octopus Energy, Rebel Energy and SO Energy, and public support organisation Citizens Advice, charities Fair By Design and the End Fuel Poverty Coalition, and consumer advisory group Which? stated that they “firmly believe that it’s fair that loyal customers are able to access the same products from their supplier as new customers” and therefore believe that the BAT should remain in place. Ofgem ultimately decided to keep the ban in place until March 2025, as originally planned.
