Ofgem could block cheaper energy deals this winter with switching charge, Martin Lewis warns

Ofgem has launched a consultation on reactivating its Market Stabilisation Charge, a mechanism that would make any supplier winning a customer through switching pay compensation to the firm they left. Martin Lewis, founder of MoneySavingExpert.com, called it a "form of switching penalty" that would make cheap fixed deals far more expensive if wholesale prices drop. Ofgem's interim director general Neil Kenward warned households to brace for "what is likely to be a difficult winter", citing energy market volatility driven by the ongoing Middle East conflict. The charge was previously active from April 2022 to March 2024, a period when over 30 energy companies went bust after Russia's Ukraine invasion sent wholesale prices surging.

The MSC would be triggered only if wholesale prices fall more than 10% below the price cap — at which point rivals poaching customers must pay 85% of the price drop to the losing supplier.

Ofgem insists reactivating the charge would not automatically raise bills, but critics say it dampens competition and shields suppliers' profits at customers' expense.

In Ireland, Yuno Energy became the third supplier to announce a winter price freeze — but only after raising electricity prices by 9.5% and gas by 11% in July, adding around €168 to average annual bills.