Ofgem opens consultation proposing MSC and BAT extension to March 2024

Ofgem opened a consultation in November proposing that the Market Stabilisation Charge (MSC) and the Ban on Acquisition-Only Tariffs (BAT) be extended until March 2024, with a decision expected in February 2023¹. The regulator had already published a decision in August 2022 to extend both measures until March 2023, and the November consultation followed feedback on that decision¹.

The MSC places a charge on suppliers when a customer switches to them at a price below a defined threshold, and BAT prevents suppliers from offering tariffs available only to new customers. Supplier obligations for the MSC were formalised into the Retail Energy Code through change proposals R0034 and R0035 in April and June 2022 respectively, with the responsibilities of the Retail Energy Code Company (RECCo) and of affected parties set out in Schedule 22 of the code¹.

RECCo, which administers the MSC, said the proposed extension raises no operational difficulties for it. In its consultation response it said:

"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 has consulted stakeholders on the measure throughout its development and mobilisation, and has raised awareness through webinars, newsletters and published guidance documents since the MSC was first triggered in November¹. It said it will continue that support for as long as the MSC remains in effect¹.

Why it matters for households

Both measures act on the offers available to households rather than on the standing charges or unit rates of an existing supply contract. BAT stops suppliers from marketing tariffs that only new customers can take, so a household cannot be offered a rate that existing customers on the same supplier are not also able to get. The MSC makes switching to a supplier at a price below a set threshold more costly for that supplier, which affects how keenly suppliers price acquisition tariffs.

An extension to March 2024 would keep both arrangements in place through another winter. For a household considering a move to a fixed deal, the practical effect is on the range and pricing of offers that appear on the market, not on the terms of a supply contract already signed. The consultation outcome was not known when RECCo published its response; a decision was expected in February 2023¹.

The detail of how the regulator oversees suppliers, and how households can raise a complaint if something goes wrong with a supply or a switch, sits with the energy regulator's remit and the complaints and redress routes that run alongside it.

What happens next

Ofgem was expected to decide in February 2023 whether to extend the MSC and BAT to March 2024¹. RECCo has confirmed it can administer the MSC under an extension without operational issues¹. No further dates beyond the expected February 2023 decision have been reported.

Sources1 cited

1. Response on extending MSC and BAT - The Retail Energy Code Company, retailenergycode.co.uk