Ofgem rule change could see new energy customers get cheaper deals this winter

Couple looking at laptop

Ofgem has proposed scrapping the ban on energy firms offering cheaper deals to new customers

Temi Laleye

By Temi Laleye

Published: 14/05/2024

- 15:19

A rule change could prompt the return of competitive deals amongst energy suppliers as well as better price savings and service standards for consumers

Ofgem has proposed bringing forward the removal of a ban on energy firms offering cheaper deals to new customers, in a bid to generate competition between suppliers.

The proposed action could take place from October meaning customers could be offered better deals with other providers this winter.

These acquisition-only tariffs offered cheaper prices only for new customers to lure them away from their existing supplier.

To protect consumers during the energy crisis, a ban on these deals was introduced as a short-term measure in April 2022. It is due to be lifted in March next year.

However, the regulator has today said that it is the right time to consider removing the rule as the energy market recovers.

It said the move would drive a faster return to competition and better price savings and service standards for consumers.

Ofgem app on phone

Acquisition-only tariffs offered cheaper prices only for new customers to lure them away from their existing supplier


The consultation considers two potential timelines for the removal: after six months, starting October 1, 2024, or at the end of the existing extension period on March 31, 2025.

The consultation seeks to determine the most appropriate timeline for the removal while considering market stability and suppliers hedging risks.

Martin Lewis, the founder and chairman of Money Saving Expert, said: “The energy market is broken. We need anything possible right now to stimulate competition and bring prices down.

“In normal times, I wouldn’t call for firms to be allowed to offer new customers cheaper prices than existing, yet these aren’t normal times.

“The current UK retail energy system was built on the premise that firms would fight each other for customers and compete on price – yet that’s hardly happening.

“Most firms are currently happy to sit on their existing customers and profit – where once you could switch and save 30 per cent, now it’s a few per cent at most.

“So, in reality, the Energy Price Cap, set up as a remedial backstop rate, is now pretty much the price.”

The average price of energy for a typical household that uses gas and electricity and pays by Direct Debit fell by £238 per year on April 1. Those who use more energy will pay more.

This reduced the energy price cap from £1,928 to £1,690 per year, a reduction of around 12 per cent.

If the ban goes ahead, an expert has stated it will be good news for households looking for a cheaper bill.

Richard Neudegg, director of regulation at Uswitch, said: “Getting rid of the ban on acquisition-only tariffs in October heralds good news for households seeking cheaper energy bills.

“With a final decision from Ofgem due in July, this move is a no-brainer to improve the chances of decent fixed deals in time for winter.


“Removing the ban will incentivise providers to work harder to compete for customers on price, service and choice.”

However, Simon Francis, coordinator of the End Fuel Poverty Coalition, said that ending the ban could lead to a rise in discriminatory tariffs that penalised people based on where they live, their meter type or if they were on a priority register.

He said: “In 2009 Ofgem banned discriminatory pricing after tariffs emerged which had unexplained differentials between payment methods, between regions and between fuels (gas and electricity). However, in 2012, the licence condition which banned these tariffs was allowed to lapse.

“If Ofgem wants market conditions to return, it must also beef up its consumer protections and ensure we don’t see a surge in discriminatory tariffs.”

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