A permanent ban on acquisition only tariffs means a fairer future

In July of this year, Ofgem announced its decision to keep in place the existing Ban on Acquisition only Tariffs (BAT) until at least 31 March 2025. 

The news was welcomed by a coalition of energy suppliers and consumer groups who had called for the ban to remain in place, and it followed a letter that we co-published with Which?, Citizens Advice, Fair by Design, and the End Fuel Poverty Coalition laying out the reasons for keeping acquisition only tariffs out of the retail market. “We were delighted to see Ofgem make the right decision in retaining the ban on acquisition only tariffs,” says E.ON UK CEO Chris Norbury. “Now we need to make sure customers continue to be protected into the future.” 

Ofgem has announced that it is considering the longer-term future of BAT, and has launched a consultation on whether to extend it until March 2026. We welcome that the regulator is listening to suppliers, consumer groups, and customers on this question, and we look forward to working with Ofgem to consider the longer-term role BAT could play as part of a broader suite of reforms to make the retail market work better for customers. 

The ban on acquisition only tariffs should be a permanent feature of the energy market

Whether they deal in energy, insurance, or any other goods or services, it is vital that markets are seen by consumers to be fair.

Before BAT was introduced, some suppliers were aggressively marketing tariffs to attract new business, with the majority of customers who benefited coming from high income brackets and only a small proportion of lower income households taking advantage of these teaser rates. Not only did vulnerable customers benefit less from these cut price deals, but they have ultimately picked up the tab as more than 30 suppliers have gone bust in recent years. 

The fact of the matter is that acquisition only tariffs do not serve anyone well in the long term, but especially not vulnerable people. If BAT was removed from the market, we would likely see a return to the unfair practice of cheap deals being subsidised by loyal customers, risking instability and greater intervention in the market.     

We are not alone in wanting to avoid a return to these practices. The public are also very clear.  When a YouGov survey commissioned by E.ON earlier in the year asked people’s views on the fairness of acquisition only tariffs, a staggering 93% of consumers said that companies should not be allowed to offer their best deals to newcomers only, and 82% said they would have less trust in their supplier if it did.

By opening the door to tariffs that a large majority of customers believe are unfair, there is a risk of injecting mistrust into the energy system that would not only affect business, but the faith that people must have in energy suppliers if they are to successfully deliver the energy transition in the years to come. “It’s crucial that we have a fair market that customers can trust,” says Ramona Vlasiu, COO at E.ON Next. “We need the public to have faith in the energy system so that we can help them make their own personal journeys to net zero.” 

Whether it’s regulators, suppliers, consumers, or the Government, the vast majority of us share a common goal in wanting the UK to achieve a successful energy transition. Reintroducing acquisition only tariffs and the consumer mistrust they encourage would make that goal more difficult.  We want to work with the Government, Ofgem and consumer groups to create a fairer and more sustainable retail market that is fit for delivering both the Clean Power Mission and our broader decarbonisation goals.  

Making the BAT permanent will create room for innovation 

To protect vulnerable customers and help bring about the energy transition we all want to see, we would like to work with Ofgem on making BAT a permanent feature of the retail energy market. 

With this done, suppliers and new entrants would be competing on things that really matter for consumers, driving permanently lower energy bills in the long term. This would mean a much greater focus on innovation that could help all households benefit from the energy transition, such as an energy-on-subscription model that would allow customers to upgrade their homes with solar, battery and heat pumps at no upfront cost and enjoy cheaper bills. 

“A fairer market can still be a competitive one,” Chris Norbury explains. “What we need is a longer-term package of reforms that ensures price protection for those who need it, incentivises innovation towards affordable and sustainable energy, and inspires greater trust among consumers.” 

To learn more about how the ban on acquisition only tariffs can help protect vulnerable customers, take a look at: Who Really Benefits from Acquisition Only Tariffs?