Policy & Grants  ·  Issue 13  ·  Tuesday 20 October 2026

Watts Happening

The UK energy newsletter that doesn't work for the industry

The Spark

In one of Ofgem's own worked examples, a household that switches supplier after a sharp fall in wholesale prices saves £151. A new charge takes £134 of it.

The charge is the Market Stabilisation Charge, and Ofgem proposed switching it back on last Friday. The £134 comes from its “longer price peak” illustration. In the main scenario, the charge takes £65.

Either way, the money moves from the person who switches to the supplier they left. Ofgem's paperwork says so.

This Week in Watts

Ofgem's switching charge is back. Last time it applied in 64 weeks out of 103.

When a household leaves a supplier, the new supplier pays the old one to cover part of the energy already bought for that customer. The charge kicks in once wholesale prices fall 10%, and covers 85% of the loss beyond that. Ofgem expects to decide in mid-November and to keep it on, likely until at least March.

Suppliers buy energy months ahead for customers on the cap. If prices fall sharply and those customers leave, the supplier sells that energy back at a loss. Average supplier profit was £5 per customer in 2025, against a £46 profit allowance in the current cap. Martin Lewis has called the charge a form of switching penalty. On Ofgem's figures, suppliers are not sitting on a cushion.

Ofgem's own draft impact assessment sets out who pays. Suppliers are expected to build the charge into their fixed tariff prices, and in aggregate, Ofgem says, suppliers would benefit. It calls the charge effectively a transfer between engaged consumers and suppliers, and likens it to an exit fee.

Ofgem's reassurance is that the last charge involved payments of over £80m across two years, under £2 per domestic consumer per year. That average spreads the cost across every household. The cost landed on switchers, through the price of their fixes, and the consultation does not say what that came to per switcher.

Ofgem says the charge only bites when prices fall sharply. The last one ran for 103 weeks to March 2024, and its dashboard shows it triggered in 64 of them, peaking at £73.84 per megawatt hour on electricity in January 2023. That was a long slide from record prices, exactly when it is designed to bite. Wholesale prices today are about 150% above pre-conflict levels.

Ofgem also decided the proposal was not “important” under the Utilities Act, the test that requires a full impact assessment, so a charge whose cost falls on one group of customers got a short draft assessment instead.

The Bill Buster

Watts on the Market

Quick Watts

From the archive