Firstly, thank you to everyone that read my article on Ofgem’s plan to renew the ban on acquisition-only tariffs and to all those that replied to the survey over the weekend.
I’ve reviewed the responses, we received over 1,500 in total, and I’ve produced and sent my response to Ofgem’s consultation.
Usually, I recommend copying and sending my response, but my response may not make sense coming from other people (it talks about my personal views and the results of the survey I conducted). Instead, I recommend reading my response below but sending your own thoughts to Ofgem.
Everything you need to know
If you would prefer to read Ofgem’s full consultation, click here: Renewing the ban on acquisition-only tariffs
If you would prefer to read my shorter explanation, click here: Answer one question for Ofgem
If you’d like to send Ofgem a response, please email: retailpolicyinterventions@ofgem.gov.uk and CC me: Richard@TheRegulatorGuy.co.uk
You can use the subject line: My thoughts on the Ban on Acquisition-only Tariffs
My Response
Here’s what I sent to Ofgem this evening:
Good afternoon Retail Market Team,
Thank you for the opportunity to give my thoughts on the ban on the acquisition-only tariff.
As your document made it clear that you would require new evidence if you are to change your minded-to position, I thought it best to conduct consumer research to determine public opinion on the extension of the BAT. As such, I have run a survey and offered it to the public for response. The survey ran from 11 September through to the morning of 15 September.
To ensure the public understood the consultation and the ban, I wrote an article explaining the origin of the ban, the opinions of suppliers, Ofgem and of charities and consumer groups, before explaining my views. I hoped this would give a well-rounded understanding of the BAT and its market-wide derogation. You can read the article here: https://theregulatorguy.co.uk/answer-one-question-for-ofgem/.
Survey Results
The survey I created had just one question:
The One Question: Which of these options would be preferable to you?
• Ofgem should remove the ban on acquisition only tariffs and stop allowing retention-only tariffs.
• Ofgem should stop banning acquisition-only tariffs but keep allowing retention-only tariffs
• Ofgem should keep banning acquisition-only tariffs but stop allowing retention-only tariffs
• Ofgem should keep banning acquisition-only tariffs and keep allowing retention-only tariffs
• Other
In total this survey received 1,590 validated responses. The results are as follows:
• Ofgem should remove the ban on acquisition only tariffs and stop allowing retention-only tariffs – 41%
• Ofgem should stop banning acquisition-only tariffs but keep allowing retention-only tariffs – 20%
• Ofgem should keep banning acquisition-only tariffs but stop allowing retention-only tariffs – 9%
• Ofgem should keep banning acquisition-only tariffs and keep allowing retention-only tariffs – 25%
• Other – 5%
To assist in visualising, please see the below pie chart.
Interestingly, this isn’t the response I expected and nor the vote I made. 41% of consumers think Ofgem should allow acquisition-only tariffs but ban retention-only tariffs.
My personal opinion is that the ban on acquisition-only tariffs should be removed, but retention-only tariffs should still be allowed.
Note: Respondents left a total of 102 comments (either as well as their answer or as part of their “Other” vote). I am happy to provide anonymised results and the comments if Ofgem would like to see them.
Analysing the Responses
Looking at the results, we can see 61% of people voted to remove the ban on acquisition-only tariffs, as opposed to just 34% voting to keep the ban.
A much closer decision is whether to keep retention-only tariffs, in which 45% of people said yes to keeping them and 50% said to ban retention-only tariffs.
I think this shows a clear message from consumers on acquisition-only tariffs, that limiting the effects of a free-market is being seen in a negative light, and it’s negatively impacting consumers’ disposable incomes.
The decision on retention-only tariffs is clearly a lot more divisive, with consumers almost evenly split on whether retention-only tariffs offer a viable solution to our energy crisis.
Of the 5% of ‘Other’ respondents, the majority of these people left comments stating that they just want to see bills go down.
My View on Removing the Ban
Ofgem is the UK’s energy regulator, not the vulnerable people’s regulator.
It is your responsibility to get the energy market in shape for the majority of consumers. I know you have a duty to be considerate of vulnerable groups, but that shouldn’t consistently be to the detriment of the larger population.
The BAT is good for suppliers, it removes the downward pricing pressure that comes with healthy competition, so you’re getting mostly positive responses from suppliers about keeping the BAT.
You’re also getting mostly positive responses from charities and consumer groups, and that’s because it is their job to look out for the people their charities are responsible for helping, primarily vulnerable groups. There is a “benefit” to this ban for consumers in debt, but this is a small proportion of the population and the benefit is actually just a removed perception of unfairness, rather than an actual cost benefit.
Ofgem, as the country’s energy regulator, needs to be able to look at the bigger picture and make decisions that help the majority of consumers. To help people in debt, you’ve introduced an Allowance for Additional Support Credit Bad Debt Costs, you’ve introduced and extended the Additional Debt Related Costs Allowance and you’re introducing a Debt Relief Scheme from 2026. You’ve done everything anyone could ask to help people in debt at the expense of the average energy consumer. To continue the ban, under the guise of being “fair” to consumers that cannot utilise cheap acquisition-only tariffs due to their debt levels is extremely unfair on the majority of consumers that are on top of their bills and are covering these 3 additional debt-related costs already.
In terms of market stability, you’ve put rules in place for suppliers to ring-fence certain levels of profit to ensure they can weather market volatility, you’ve changed rules to ensure new entrants to the energy supply market have the correct financial backing, you’ve increased the profit element of the price cap, you’ve covered all of the additional debt costs, you’re looking at adjusting baseline consumption values in the price cap to ensure suppliers are covering all of their costs and you’ve added a dozen other costs to the cap to ensure every single penny is covered for the suppliers. I think they are stable now.
To keep this ban in place is to continue forcing customers to be in a free market without the benefit of active competition. The only benefit to consumers of having a privatised energy system is that it should have open competition forcing prices down and efficiencies up, but you’re stopping that from happening by banning the most competitive tool a supplier has, acquisition-only tariffs.
To sum up, I believe Ofgem should allow the market to return to a competitive nature, the results of the survey show that 61% of the public agree with me on this.
If you have any questions on the above, or would like to see the anonymised results of the survey, including the comments given, please contact me at Richard@TheRegulatorGuy.co.uk.
Kind Regards,
Richard Winstone
The Regulator Guy.
