Poll shows strong public support for acquisition-only tariff ban

Nine in 10 customers and 71% of MPs oppose Ofgem’s plan to remove the ban on acquisition-only tariffs (BAT).

That is according to a poll commissioned by So Energy, whose chief executive called the regulator’s proposal “a scandal”.

The move has also been opposed by Octopus Energy, who said it would usher “Del Boy tactics back into the energy retail market”.

On Tuesday (14 May), Ofgem announced it was minded to lift the BAT, which prevents suppliers offering cheaper deals exclusively to new customers, in October. It is currently scheduled to run until 31 March 2025.

An Opinium poll of 2,000 people carried out for So Energy last month, found 87% agreed that existing customers should be offered the same tariffs as new ones. Only 6% disagreed with the statement. A further 79% wanted to see a replication in energy of the rules implemented by the FSA in 2022 for insurance providers. This followed a very similar model to the BAT, which was first brought in as an interim measure by Ofgem in April 2022.

Separately, So Energy commissioned YouGov to survey 103 MPs at the end of last month, asking them whether they agreed with the decision to remove the BAT. This saw 17% agreeing (with 9% strongly agreeing) and 71% opposed (36% strongly disagreeing).

Revealing the poll results, So Energy also highlighted that 10 of the 14 respondents to Ofgem’s call for input on the topic opposed the removal of the BAT. The company pointed out that the four supportive submissions were all from price comparison websites and third party intermediaries.

Chief executive Simon Oscroft said: “Ofgem’s proposal is terrible news for energy customers, as evidenced by this new polling and research.

“It’s a scandal that suppliers may soon be able to hide their best deals from their loyal and often vulnerable customers. It will destroy trust by embedding discriminatory pricing practices into the market, just as fixed deals are beginning to reappear in the market.

“Ofgem’s justification for their proposal makes no sense. We know MPs, customers, suppliers, and consumer groups don’t want this. Unsurprisingly, the only group supporting Ofgem are price comparison websites who will make a fortune from incentivising an unsustainable race to the bottom on price.”

His view was supported by Conservative MP John Penrose, who has long campaigned for a relative price cap in energy, whereby a maximum mark-up is set between a supplier’s best competitive price and their default tariff.

He said: “Loyalty penalties are a huge rip-off for consumers. They dropped out of sight when energy prices spiked after Russia invaded Ukraine, but if Ofgem lifts the ban on firms hiding their best prices from loyal customers, the rip-offs will be back with a vengeance. Ofgem mustn’t leave consumers unprotected, so if they lift the ban, they’ve got to replace it with something even stronger instead.”

One of the concerns raised about the return of acquisition-only tariffs is the potential for unsustainable business models to creep back into energy retail. Ofgem acknowledged these fears in its consultation this week but insisted that the market is now subject to more stringent financial resilience measures.

However, for Octopus Energy’s director of economics and regulation, Rachel Fletcher, reservations remain.

“Allowing suppliers to block their best deals from loyal customers would return the ‘Wild West’ of the energy industry,” she said.

“The loyalty penalty was a key reason 30 energy companies went bust, and ended up adding billions of pounds on to energy bills. Ofgem was right to ban these unsustainable Del Boy tactics, and it would be crazy to bring them back now.

“Instead we need a more transparent, fairer market where suppliers are forced to compete based on innovation, customer service and efficiency. We need lower prices for everyone, not just the few.”

Meanwhile, Gillian Cooper, the director of energy at Citizens Advice, said removing the BAT would unfairly hit older and disabled consumers the hardest, as they are less likely to switch to a new supplier.

She added: “It also protects millions of people with energy debt, whose suppliers can block them from switching, as it means they don’t have to stay on the most expensive tariffs pushing them even further into the red.

“Keeping the ban in place is a no-brainer. Ofgem must resist pressure to scrap it and ensure suppliers are proactively keeping customers up to date about their cheapest deals.”

Tim Jarvis, Ofgem’s director general, markets, told Utility Week the BAT was designed to be a time-limited measure and that “as the market continues to stabilise, now is the right time to consider removing it”.

He added: “Other measures we have introduced to make the market more resilient – in addition to the role the price cap plays to protect loyal customers from being exploited – lessens the need for a ban on targeted introductory tariffs.

“We continue to look at the bigger picture as part of our review of standing charges, affordability and debt. A variety of different tariffs have returned to the market and switching has been picking up. We will continue to monitor competitive developments closely.”

So Energy, Citizens Advice and Ofgem will debate the future of the BAT at Utility Week Live on 22 May. See the full agenda and sign up for free here.