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Energy · Europe

Ofgem weighs charge that could make energy switching costlier

Ofgem is consulting on whether to activate its Market Stabilisation Charge, a proposal that could increase costs for households switching energy suppliers. Under the plan, a supplier gaining a customer would pay the previous supplier 85% of qualifying wholesale-price drops, and could pass some or all of that charge on through higher tariffs.

AI-assisted synthesis · Based on 3 independent reports from 4 outlets · Article text read from 2 of 3 reports · 1 article captured only in partHow it's made

View timeline · 7 entries
4 outletsLatest reporting 3 min read
Coverage: Center OnlyL 0 · C 4 · R 0
Updat3 graphic: Europe
Updat3 graphic · Map data: Natural Earth Natural Earth (public domain)

What happened

Key facts

  • Ofgem is consulting on whether to activate its Market Stabilisation Charge (per brentwoodlive.co.uk, dailyrecord.co.uk).
  • Ofgem launched the consultation on October 16, and it is open until October 29 (per dailyrecord.co.uk).
  • Ofgem could decide to activate the charge as early as November 2026 (per brentwoodlive.co.uk).
  • The proposed charge would apply if wholesale energy prices fell more than 10% below the level built into the energy Price Cap (per brentwoodlive.co.uk).
  • The new supplier could pass some or all of the charge on to customers through higher tariffs (per brentwoodlive.co.uk).
  • Ofgem restored the power to introduce the charge to suppliers' licences in May (per brentwoodlive.co.uk).

The brief

Ofgem is consulting on whether to activate a Market Stabilisation Charge that could make switching energy suppliers more expensive for UK households. Under the proposal, when wholesale energy prices fall far enough below the level assumed in the energy Price Cap, a supplier gaining a customer through a switch would pay the previous supplier part of the price drop.

The new supplier could pass some or all of that cost on to customers through higher tariffs. Ofgem launched the consultation on October 16, and it is open until October 29. A decision could allow the charge to begin as early as November 2026.

The regulator restored the power to introduce the mechanism to suppliers’ licences in May; it is now consulting on whether to activate it. The proposed threshold is a wholesale-price fall of more than 10% below the level built into the Price Cap. If that condition is met, the incoming supplier would pay the previous supplier 85% of the wholesale-price drop beyond the threshold.

The proposal therefore links the cost of a switch to the gap between wholesale prices and the price level reflected in the cap. The charge would not necessarily appear as a separately labelled fee for a household.

The proposal allows a supplier to transfer some or all of its payment into higher tariffs, which could reduce the savings available to customers moving to a cheaper deal. Daily Record described the concern as a potential limit on savings when wholesale prices fall; Brentwood Live focused on the possibility that switching to cheaper tariffs could become more expensive.

Martin Lewis, founder of Money Saving Expert, criticised the proposal, saying it was not good news for consumers and that he did not want it to slip under the radar.

He called the measure “basically a form of switching penalty.” Daily Record also reported his warning that cheaper fixed deals and offers for customers who switch could become more expensive if wholesale prices drop sharply.

The proposal’s stated mechanism directs a payment from the supplier acquiring a switching customer to the previous supplier, with the incoming supplier able to pass on some or all of the cost. The sources describe consumer costs and the payment formula, but do not provide an estimate of how much a household’s bill or savings would change.

The consultation and any subsequent decision will determine whether Ofgem activates the charge and whether the mechanism takes effect.

Why it matters

  • Households switching energy suppliers could face higher tariffs if their new supplier passes on some or all of the charge.
  • When wholesale prices fall more than 10% below the Price Cap level, the proposed payment is 85% of the drop beyond that threshold, reducing the potential savings from switching.
  • The incoming supplier would pay the customer’s previous supplier, giving suppliers on both sides of a switch a direct financial stake in the proposed mechanism.

What to watch next

  • Whether Ofgem decides to activate the Market Stabilisation Charge after its consultation.
  • Whether Ofgem reaches a decision allowing the charge to begin as early as November 2026.
  • Whether suppliers pass some or all of the proposed payment on to customers through higher tariffs.
  • Whether wholesale prices fall more than 10% below the level built into the energy Price Cap.

How it's being covered

Coverage analysisShow details
4 source articles · 4 unique outlets · 3 distinct reports
Outlet political mix: Center Only· 4 Center
Where the outlets are based: Europe 100%
Outlet political mix
Center Only
Left
Center
Right
0 outlets
4 outlets
0 outlets
The marker shows coverage balance: each unique outlet counts once.
Geography
Where the outlets covering this story are based.
4 unique outletsDominant coverage: Europe
Coverage imbalance
  • Coverage is currently concentrated among Center-rated outlets (4 of 4 rated sources); comparatively few Left or Right-rated outlets have published on the event.
  • Coverage is currently concentrated among outlets based in Europe (4 of 4 geographically-identified sources).
How we measure coverage

How outlets' accounts compare

1 framing difference · 1 uncorroborated claim · 2 information gaps
The reports repeat the same account with different emphasis; its central claims are not independently confirmed in the reporting Updat3 read.Compared across 2 reports whose article text Updat3 read; 1 other outlet was checked by headline only.
Framing / emphasis differences
Sources emphasise different angles, actors or consequences of the same reporting.
  • Brentwood Live foregrounds the possible added cost of switching to cheaper tariffs; Daily Record emphasizes the possible reduction in savings when wholesale prices fall.
Updat3: These are differences of emphasis, not disputes about what is reported. They do not show that the reported claims are true.
One-sided or uncorroborated claims
Claims that come from one party or one source family and are not independently corroborated.
  • Martin Lewis called the proposal “basically a form of switching penalty” and said he did not want it to slip under the radar.
Updat3: Not independently corroborated yet — treat as a claim, not an established fact.
Not established by the reporting
Information the available reporting does not contain or confirm. This is a gap, not a disagreement.
  • The sources do not quantify the potential effect on individual household bills or provide examples of qualifying tariff prices.
  • The sources do not quantify how much the charge might add to household tariffs or reduce savings.
Updat3: Updat3 cannot conclude anything about this from the current sources.

Timeline

Developments from this story's sources, dated background we compiled and fact-checked, and our earlier coverage. Each row says which.
  1. Parliament passed the Gas Act, establishing the framework for privatising and liberalising Britain's gas market.
    Background · compiled and fact-checked by Updat3
  2. Parliament passed the Electricity Act, establishing the framework for privatising the electricity industry.
    Background · compiled and fact-checked by Updat3
  3. Households across Great Britain gained the ability to choose their gas supplier.
    Background · compiled and fact-checked by Updat3
  4. Domestic electricity customers in Great Britain gained the ability to choose their supplier.
    Background · compiled and fact-checked by Updat3
  5. Parliament passed the Domestic Gas and Electricity (Tariff Cap) Act, requiring Ofgem to cap standard variable and default tariffs.
    Background · compiled and fact-checked by Updat3
  6. Ofgem implemented the energy Price Cap.
    Background · compiled and fact-checked by Updat3
  7. Ofgem restored to suppliers' licences the power to use a Market Stabilisation Charge.
    Background · compiled and fact-checked by Updat3

How we got here

In May 2026, Ofgem restored to suppliers’ licences the power to use a Market Stabilisation Charge, reviving a mechanism first introduced during the 2021–22 energy-market crisis. The 2026 restoration followed the collapse of dozens of UK energy suppliers during the crisis, when firms that had sold energy below the cost of replacing it could not withstand rising wholesale prices.

The domestic energy Price Cap provides the benchmark against which the proposed mechanism is framed. The Domestic Gas and Electricity (Tariff Cap) Act 2018 required Ofgem to cap standard variable and default tariffs, and the regulator implemented the cap in January 2019. The 2021–22 crisis made the gap between wholesale costs and the cap particularly consequential.

Original sources

4 articles from 4 outlets

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