Energy regulator Ofgem has been criticised for deterring companies from cutting their prices when they drop. The government body has today (Monday, May 16) announced a change to the market stabilisation charge (MSC) so that suppliers who win customers with cheaper deals will have to pay the old supplier 85% of the difference in tariffs.
The MSC became effective on April 14, but it is yet to be activated. Currently, it would be activated if energy prices fall 30% below the level of the wholesale energy price assumed by the current level of the price cap. However, today’s decision reduces this trigger point to a 10% fall.
Currently, if activated, the losing supplier is reimbursed by 75% of the cost of the energy above the trigger point they had bought in advance for the customer they have lost, assuming they had bought energy as set out in the price cap methodology. However, today's decision has increased this to an 85% reimbursement. You can get more financial news and other story updates by subscribing to our newsletters here.
