A coalition of energy suppliers including Octopus, Eon and So Energy is “taking the unusual step” of jointly writing to Ofgem, urging it to keep the Ban on Acquisition only Tariffs (BAT).
In open letter, which has also been signed by Rebel Energy, Citizens Advice and Which?, the organisations say they are “particularly concerned to see that the impact on consumers in debt was not considered in Ofgem’s recent consultation on the BAT”.
Signatories include:
- Gillian Cooper, director of energy, Citizens Advice
- Martin Coppack, director, Fair by Design
- Chris Norbury, chief executive, Eon UK
- Dan Bates, chief executive, Rebel Energy
- Simon Francis, coordinator, End Fuel Poverty Coalition
- Rocio Concha, director of policy & advocacy, Which?
- Greg Jackson, chief executive, Octopus Energy
- Simon Oscroft, chief executive, So Energy
The organisations warn that offering “below cost unsustainable acquisition only deals” contributed to over 30 suppliers going bust during the height of the energy crisis, resulting in billions in energy costs being left behind for others to pick up.
“Our organisations are very clear that we do not want to see a return to a market which discriminates against loyal customers,” the letter states.
It adds: “Removing the BAT, as proposed from this October, risks exacerbating the loyalty penalty and unsustainable business practices. The additional supplier financial resilience measures put in place since the energy crisis are as yet unproven, and will not be fully in place at the time that Ofgem proposes to remove the BAT.
“The proposal argues the BAT is having a negative impact on the market, but lacks evidence given it is less than two months since the Market Stabilisation Charge, which also impacted the price of new products, has been removed.
“We would also highlight that there are other ways that customers may be able to save from tariffs on the market, but crucially these savings today are available to all customers rather than just a select few.”
The letter closes by urging the regulator to reconsider its proposal, putting on hold any final decision on the future of the ban until the review of the long-term role and design of price protection has concluded.
It comes as Which?’s latest survey findings show 81% of people think it would be unfair if their supplier was offering cheaper deals to new customers only.
A similar number (78%) said they would think this was unfair even if they would potentially benefit in the short term by signing up to a discounted deal.
Signatory Chris Norbury, Eon UK chief executive, said removing the ban “would bring unfairness and instability back to the energy market”.
He added: “Bringing back a loyalty penalty and offering best deals to new customers only risks returning to tease and squeeze unsustainable practices that will harm both consumers and our industry.
“The transition to net zero will bring long-term benefits in terms of affordability, innovation and social value, but to get there we cannot allow anything that damages trust with the public.”
While EDF Energy did not sign the letter, it has come out in support of its aims.
A spokesperson said: “We agree with consumer groups and others that a ban on acquisition tariffs should remain. Acquisition tariffs led to poor outcomes in the past with loyal customers, the elderly and disabled customers hit the hardest. There is little to suggest it would be any different this time around. We urge Ofgem to reconsider.”
Rocio Concha, Which? director of policy and advocacy, added: “Our research has shown that consumers overwhelmingly believe cheaper energy deals only available to new customers are unfair – even when they might stand to benefit.
“That’s why Which? and a coalition of energy firms and consumer organisations have written to Ofgem warning them not to lift the ban on acquisition-only pricing.
“Allowing deals exclusively for new energy customers could open the door to loyalty penalties and would come at the expense of those who wish to stick with their current supplier on their best deal.”
A spokesperson for Ofgem said: “We are grateful to the consumer groups and stakeholders for their response to our statutory consultation.
“We appreciate the strength of feeling on this issue and will carefully consider all perspectives in the coming weeks to inform our final decision.”