Martin Lewis warns Ofgem's new energy 'switching penalty' will protect firms' profits at households' expense

Martin Lewis has warned that Ofgem's plan to reactivate its market stabilisation charge is "a form of switching penalty" that will make cheap fixed deals more expensive precisely when bills fall. The MoneySavingExpert founder said the charge — which forces any supplier gaining a customer to compensate the one they left — will "dampen competition" and protect energy firms' profits rather than consumers. Ofgem launched a consultation on the measure, which could come into force as soon as November, citing Middle East conflict-driven wholesale price volatility and warning of a "difficult winter."

Lewis said in a nutshell, if prices drop sharply, 'cheap fixes will be a lot more expensive to protect energy firms' profits.'

The market stabilisation charge was previously active from April 2022 to March 2024 after Russia's Ukraine invasion sent more than 30 suppliers bust.

Ofgem insists the charge would not automatically raise bills, but critics say it kills the competition that drives prices down.