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Cheap energy deals for switchers could be back soon after Ofgem ends ban – Martin Lewis says it's 'better late than never'

Rules that prevent energy firms from offering cheaper deals to new customers could be scrapped by October, paving the way for you to cut your bills by switching supplier. MoneySavingExpert.com founder Martin Lewis said the move is a much-needed fix for the broken energy market, though while "better late than never", he cautioned that the change is still too far off.

The 'ban on acquisition-only tariffs' was introduced by energy regulator Ofgem in April 2022 during the height of the energy crisis, when soaring energy prices saw more than 20 energy firms go bust and the market for switching suppliers all but disappear.

Energy firms were prevented from offering cheaper prices to new customers unless they could also offer them to existing customers – designed to stop energy firms from offering low prices to win new customers when there was so much volatility in the energy market.

The ban was due to end in March 2025, but Ofgem today (14 May 2024) launched a consultation on whether it should be lifted six months earlier. This means you could potentially see much more competitive switching deals come October this year, if not sooner.

Martin Lewis: 'This is better late than never – though still too long away'

Although welcome news, Martin believes lifting the ban in October is still too far off, and should be ended sooner to help households find better deals and start saving on their energy bills.

MoneySavingExpert.com founder Martin Lewis said: "The energy market is broken. We need anything possible right now to stimulate competition and bring prices down.

"In March, I was staggered when Ofgem told me 'there is evidence that removing the acquisition-only tariff ban would benefit consumers', but didn't remove it 'in case it was moving too quickly'. I disagreed and said we should throw the kitchen sink at getting people cheaper deals. So, this is better late than never.

"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%, now it's a few percent at most. So in reality the Price Cap, set up as a remedial backstop rate, is now pretty much the price."

This is the last remaining measure Ofgem put in place to help stabilise the energy market

Earlier this year, Ofgem scrapped the 'Market Stabilisation Charge', which was also introduced during the worst of the energy crisis. It required energy suppliers to pay a charge to the previous supplier for every customer that switches to it. This allowed suppliers that have purchased energy in advance to recover costs if wholesale prices drop suddenly and huge numbers of customers switch away from their standard variable tariff.

It also acted as a deterrent for energy firms to offer highly-competitive deals, as they would have to pay a fee each time a customer switched to them.

There are energy deals worth switching to now

Based on current Price Cap predictions, we think fixing is worth considering if a fixed deal is priced 3% less than the current April Price Cap, especially if you value certainty over what you'll pay. You can use our restarted Cheap Energy Club to ensure you're on the cheapest deal possible...

  • You can to undercut the Price Cap with E.on Next's Pledge tariff. It promises to remain roughly 3% below the Price Cap for a year (so £50 a year at typical use), so if the Cap drops 8% on 1 July (as predicted by energy analysts Cornwall Insight), so too will this tariff. Therefore if you're going to remain on the Price Cap, it's worth considering this option.

  • Ecotricity's Green 1yr fixed is open to new and existing Direct Debit customers, but you must have, or be willing to get, smart meters. It's currently the market's cheapest standalone fix, averaging 9% less than the current Price Cap, but has £75/fuel early-exit fees.

  • Next best is Outfox the Market's Fix'd Dual May24 v2.0. Averaging 8% less than the current Price Cap and with no exit fees, it could be worth considering for some. But it's only available as dual-fuel and you must manage your account online.

  • Existing Octopus customers could consider its Octopus Tracker tariff (if you're not already with Octopus, you can try switching to its standard variable tariff, then switch to this). Its rates change daily based on wholesale costs, meaning it's been substantially cheaper than the Price Cap in recent months.

    Alternatively, Octopus' electricity-only Agile tariff has rates that change half-hourly, based on wholesale prices – good for those who can shift their electricity use out of peak hours.

If you're still on the Price Cap, our Cheap Energy Club comparison will give you a bespoke prediction of what it'll cost you over the next year, so you can compare that with fixing (though our comparison's currently only optimised for dual-fuel price-capped monthly Direct Debit users – we're working on improving that).

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