Guidelines stopping power suppliers from providing power offers completely to new clients may come to an finish in October.
Vitality regulator Ofgem is consulting on scrapping the ban on providing cheaper power offers to new clients, often known as acquisition-only tariffs.
Ofgem mentioned now was the time to look into lifting the ban as power costs slide; power value cap fell by 12.3% in April – the bottom in two years, and will fall much more within the coming months. Ofgem has additionally launched a session on the way forward for the power value cap to ‘future-proof’ client value safety.
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We have a look at what lifting the ban may imply for you and why purchasing round for power may develop into much more necessary.
Ofgem to take away ban on cheaper power offers
Ofgem mentioned the ban on power suppliers providing discounted offers to tempt new clients to ‘swap and save’ may very well be scrapped in October.
The ban was initially put into place in April 2022, when Russia invaded Ukraine and sparked an power disaster throughout Europe. The ban prevented power suppliers from giving unique low-cost offers to new clients solely.
To protect shoppers and stabilise the risky wholesale market, Ofgem launched the ban which was solely presupposed to final until March 2023. Nevertheless, IT was stretched for an extra two years till 31 March 2025 as power costs remained excessive.
Now, with power prices sliding, Ofgem mentioned now may very well be the fitting time to carry the ban. The transfer may see the return of decrease costs and aggressive power switching incentives from 1 October, and even earlier.
Tim Jarvis, director normal of markets at Ofgem, mentioned: “The Ban on Acquisition-only Tariffs (BAT) was launched in April 2022 to guard shoppers through the power disaster, and was all the time designed to be a time-limited measure. Because the market continues to stabilise, now could be the fitting time to think about eradicating IT.
“Different measures now we have launched to make the market extra resilient – along with the function the value cap performs to guard loyal clients from being exploited – lessens the necessity for a ban on focused introductory tariffs.
“We proceed to take a look at the larger image as a part of our evaluate of standing expenses, affordability and debt. A wide range of completely different tariffs have returned to the market and switching has been selecting up. We’ll proceed to observe aggressive developments intently.”
This transfer is supported by information from Ofgem which reveals that there was a rise in power switching by 157% in comparison with two years in the past. Plus, the variety of households that switched their electrical energy suppliers jumped from 173,661 in January 2024 to 174,369 in February 2024 – up by 2,708.
What does Ofgem’s ban reversal imply for power offers?
Although power payments fell by 12.3% and got here right down to a mean of £1,690 on 1 April, IT‘s anticipated to drop 7.7% this summer time in line with predictions by analysts at Cornwall Insight. That is a -20% fall in typical power payments as in comparison with the January value cap, and slashes month-to-month payments by roughly £10.83.
With the ban doubtlessly lifting proper earlier than winter, IT ought to give households extra alternatives to seek out aggressive power offers somewhat than people who sway just below the power value cap, which is able to rise to round £1,636 in October.
Nevertheless, Ofgem has mentioned to not hold hopes too excessive, because the reversal of the ban would not deliver again low-cost power offers that have been typically seen earlier than 2021.