Ofgem move to penalise energy firms for cheaper deals risks trapping households in expensive tariffs this winter

Martin Lewis has called Ofgem's proposed Market Stabilisation Charge a "form of switching penalty" that would make cheap fixed deals far more expensive if wholesale prices fall. The regulator launched a consultation on reactivating the measure — first used after Russia's Ukraine invasion — citing Middle East conflict-driven wholesale market volatility and warning of a "difficult winter" ahead. Critics say the plan protects supplier profits at the expense of consumers hunting for better deals.

If wholesale prices drop more than 10%, any supplier winning a new customer would have to pay rivals 85% of that price fall in compensation.

Ofgem insists the charge would not automatically raise bills, but fixed deals would reportedly become pricier to shield suppliers from losses.

The MSC was last active between April 2022 and March 2024, when wholesale chaos caused more than 30 energy firms to go bust.