The Market Stabilisation Charge (MSC) expired on 31 March 2024, according to an analysis of Warm This Winter Tariff Watch reports published by the End Fuel Poverty Coalition1. The charge had allowed suppliers to recover costs when a customer moved to a cheaper provider while wholesale prices were falling, and its removal is listed among six recommendations from those reports that Ofgem has implemented1.
The same analysis sets out nine further proposals that it says have not been acted on1. These include capping exit fees, shifting costs from standing charges to unit rates, and improving transparency over network costs. On standing charges, it states that reform could reduce annual charges on households by £152.06, a fall of 46 per cent from £334.08 a year to £183.021.
The report also gives figures on fixed tariffs. It says exit fees on energy bills have increased by 345 per cent in the last three years, that around three million UK households have opted for fixed energy tariffs, and that the majority of those tariffs carry exit fees of more than £1001. A snapshot taken in April 2024 found that 76 per cent of fixed tariffs had annual costs above the Ofgem price cap1. Separately, it states that the cost of the gas network has surged 38 per cent, and refers to 14 obscure charges on households' electricity bills1.
On the implemented measures, the analysis records that Ofgem implemented a levelling charge balancing standing charges between prepayment meter and direct debit customers, conducted a review of wholesale energy allowances and concluded there were no systematic differences in costs, and revised the EBIT allowance to include both fixed and variable components1. It also records customer service reforms effective December 2023 and conditions for prepayment meter installations effective 8 November 2023, adding that the latter did not go far enough in addressing the concerns of all campaigners1.
"The MSC expired on March 31, 2024."
Why it matters for households
The MSC sat behind the scenes rather than as a line on a bill, but it affected what happened when a household tried to leave a supplier for a cheaper deal. With it gone, that particular obstacle to switching no longer applies. The wider picture in the same analysis is that the costs of changing course are now concentrated elsewhere: in exit fees on fixed-rate energy tariffs, which the report says have risen sharply and which most fixed deals now carry at over £1001. For a household weighing a fixed deal against a standard variable tariff, the fee for leaving early is part of the calculation, and the report's April 2024 snapshot found most fixed tariffs priced above the price cap1.
Standing charges are the other strand. These are the fixed daily amounts paid regardless of how much energy is used, and the report puts the potential reduction from reform at £152.06 a year1. That figure matters most to low-usage homes, where fixed charges make up a larger share of the total. The report notes that delivering such changes would require changes to Ofgem regulations and government funding, alongside action to protect low income and high usage households such as those relying on energy for medical needs1. It also refers to a social tariff backed by well over half the population according to polling by Opinium, which it says could be paid for through contributions from energy industry profits1.
What happens next
The analysis was published ahead of the next Ofgem price cap announcement, which it dates to Friday 23 August1. It states that Ofgem has closed its call for input on standing charges but that no further steps have been taken to move adjustment allowances, headroom allowances, profit allowances, payment uplift and levelling costs entirely to the unit rate section of the bill1. On shifting policy costs from standing charges to general taxation, it says the Labour Party indicated a willingness to address standing charges broadly in its manifesto, but that no concrete steps have been taken1. No date has been reported for a decision on either.
Sources1 cited
- Ministers urged to review nine nightmare energy rules, endfuelpoverty.org.uk