Ofgem published its decision to extend the Market Stabilisation Charge (MSC) and the Ban on Acquisition-Only Tariffs (BAT) until March 2023 in August 20221. In light of feedback on that decision, the regulator opened a consultation in November proposing that both measures run until March 2024, with a decision expected in February 20231.
Supplier obligations regarding the MSC were formalised into the Retail Energy Code through REC Change Proposals R0034 and R0035 in April and June 2022 respectively1. The responsibilities of the Retail Energy Code Company (RECCo) in administering the charge, and those of impacted parties, are set out in Schedule 22 of the REC1.
RECCo, which administers the scheme, said the proposed extension raised no operational difficulties for it:
"We have a flexible procurement strategy and have already made provision for an extension of the scheme beyond the initially identified March 2023 end date. We can therefore confirm that the extension of the MSC as proposed in this consultation poses no operational issues for RECCo."
RECCo added that it had consulted stakeholders throughout the development of the operational process and continued to raise awareness through webinars, newsletters and published guidance documents since the MSC was first triggered in November1. It said it would continue that support as long as the MSC remains in effect1.
The sources do not set out the rates or thresholds applied under the MSC, nor the full list of tariffs or suppliers affected. Those details have not been reported in the material cited here.
Why it matters for households
The MSC is a charge paid by a supplier when it takes on a customer from another supplier, intended to discourage rapid customer switching during periods of high wholesale prices. The BAT prevents suppliers from offering tariffs available only to new customers. Together, the two measures shape what deals appear on the market and how easily a household can move between suppliers.
For a home's energy independence, the practical effect is on choice rather than on the price of any single unit of gas or electricity. While the BAT is in force, a supplier cannot build a growth strategy around acquisition-only deals, which limits the number of headline offers aimed at switchers. While the MSC applies, a supplier weighing up whether to accept a new customer carries an additional cost that may be reflected in what it is willing to offer. The extension to March 2023, and the proposal to run both measures to March 2024, therefore bear on how much movement there is in the tariff market and on the terms suppliers are willing to put in front of households under the tariff rules that Ofgem sets.
What happens next
Ofgem's consultation, opened in November, proposes extending the MSC and BAT until March 20241. A decision is expected in February 20231. The extension already decided runs until March 20231.
Sources1 cited
- Response on extending MSC and BAT - The Retail Energy Code Company, retailenergycode.co.uk