Ofgem, the regulator for Great Britain's energy market, is consulting on a proposal to reintroduce the market stabilisation charge, a mechanism that would require energy suppliers to pay rivals when they attract customers with cheaper deals.
The regulator cited concerns about supplier insolvencies during volatile winter months. Ofgem said the charge aims to prevent firms from failing if they experience a sharp customer exodus. The regulator attributed the volatility to sharp swings in energy prices linked to the conflict in the Middle East.
Under the proposed mechanism, suppliers offering discounted rates to win market share would face financial penalties payable to competitors. The charge has previously existed but is no longer in effect. Ofgem has opened a formal consultation on whether to restore it.
The proposal reflects tensions within energy market design. Suppliers typically compete by lowering prices to gain customers. The MSC would effectively tax that competitive behaviour to protect rival firms from collapse. Ofgem framed the measure as a stability tool for winter, when energy demand peaks and price volatility poses acute risks to supplier balance sheets.
The consultation is open to industry feedback. No decision has been announced.