Citizens Advice published its response to Ofgem's statutory consultation on short-term interventions in the energy market on 17 January 20221. The consultation asked whether measures should be introduced to discourage switching, with the aim of reducing the risk that more energy suppliers go bust1.
Citizens Advice said it "strongly opposed" the suggestion that exit fees should be introduced on default tariffs1. It also said it supported a separate proposal that suppliers should be required to offer all their new tariffs to existing customers1.
"We strongly opposed its suggestion that exit fees should be introduced on default tariffs, but provided support for a proposal that suppliers should be required to offer all their new tariffs to existing customers."
The consultation was run by Ofgem, the energy regulator, as a statutory consultation, the formal stage at which rule changes are proposed and decided1. The response was published by Citizens Advice, one of the bodies that represents household energy consumers1.
The two proposals pulled in different directions. Exit fees on default tariffs would make it more costly for a household to leave a tariff, which is the mechanism by which switching would be discouraged1. Requiring suppliers to offer new tariffs to existing customers would widen what is available to households already with a supplier, rather than restricting movement between suppliers1.
The response document itself runs to 219 KB and is dated 17 January 20221. No figures for the proposed level of any exit fee, and no list of which tariffs would be covered, appear in the published response page1. Ofgem's decision on the consultation has not been reported in the material available1.
Why it matters for households
Default tariffs are the tariffs a household is placed on when a fixed deal ends and no new one is chosen. An exit fee on a default tariff would mean a charge for leaving it, which changes the cost of switching away rather than the cost of the energy itself. For a household trying to keep control of its own energy costs, the ability to move to a different tariff without a penalty is part of what makes switching a usable option.
The second proposal works in the other direction. If suppliers must offer all their new tariffs to existing customers, a household does not have to change supplier to get access to a supplier's newest deal. That affects tariff rules and consumer protections and what households can expect to be offered.
Both measures were framed by Ofgem as short-term responses to market volatility, not permanent changes to how the retail market works1. The risk identified was supplier failure, which affects households directly when a supplier goes bust and customers are moved to another one.
What happens next
The consultation was a statutory consultation, the stage at which Ofgem sets out proposed changes and takes responses before deciding1. Citizens Advice has now set out its position on both proposals1. What Ofgem decides, and when, has not been reported1.