E.ON and consumer groups urge Ofgem not to lift ban on ‘new customers only’ tariffs

Chris Norbury, E.ON UK CEO, said: “Removing this ban on ‘brand new customers only’ tariffs would bring unfairness and instability back to the energy market. Bringing back a loyalty penalty and offering best deals to new customers only risks returning to 'tease and squeeze' unsustainable practices that will harm both consumers and our industry.

“The transition to net zero will bring long-term benefits in terms of affordability, innovation and social value, but to get there we cannot allow anything that damages trust with the public.

“We know this because our customers have said so. In a recent YouGov poll¹ we commissioned, nine in ten of our customers said suppliers should not be able to restrict their best deals to new customers – and more than three quarters said they would have less trust in their supplier if it did so.

“A fairer market can still be a competitive one, and there are some great deals for customers on the market today that are open to all. What we need is a longer-term package of reforms that ensure price protection for those who need it, that incentivises innovation towards affordable and sustainable energy, and which inspires greater trust among consumers.”   

Open letter to Ofgem

Consumer groups Which?, the End Fuel Poverty Coalition, Citizens Advice and Fair by Design, along with energy suppliers E.ON, Octopus, So Energy and Rebel Energy have written to the energy regulator calling for it to reconsider its proposals to lift the ban on acquisition-only tariffs.

We firmly believe that it’s fair that loyal customers are able to access the same products from their supplier as new customers. This is backed up by recent polling by YouGov which shows that 93% of customers thought suppliers should not be able to restrict their best deals to new customers only, and 82% of the customers said they would have less trust in their supplier if it only offered its best deals to new customers. As a result we are taking the unusual step of jointly writing to ask that the GEMA Board reconsiders the proposal to remove the Ban on Acquisition only Tariffs (BAT).

The BAT was introduced by Ofgem in April 2022. It has played a vital role in delivering fairer outcomes for customers by ensuring loyal customers are able to get the best deals. It also ensures that millions of customers in debt, who may not be able to switch to a new firm for months or even years, are able to access a better deal with their current supplier. We were particularly concerned to see that the impact on consumers in debt was not considered in Ofgem’s recent consultation on the BAT.

Our very recent history shows the flaws in encouraging below cost unsustainable acquisition only deals by some which contributed to over 30 suppliers going bust. Billions of pounds of energy costs left behind by those suppliers still had to be paid despite them crashing out of the market, in many cases taking their customers' money with them. This was ultimately paid for by all consumers through their bills.

Our organisations are very clear that we do not want to see a return to a market which discriminates against loyal customers. Indeed, as we look ahead, customers need to have greater trust in their energy supplier to help them provide the right solutions for upgrading their home with green technologies. That will require deeper and longer term relationships with customers, rather than harking back to a world where success was simply measured by the amount of switching taking place. As set out in the Government’s strategy and policy statement for energy, ‘sustainable competition in the energy retail market must be the primary driver of good outcomes for the majority of consumers.’

Removing the BAT, as proposed from this October, risks exacerbating the loyalty penalty and unsustainable business practices. The additional supplier financial resilience measures put in place since the energy crisis are as yet unproven, and will not be fully in place at the time that Ofgem proposes to remove the BAT. The proposal argues the BAT is having a negative impact on the market, but lacks evidence given it is less than two months since the Market Stabilisation Charge, which also impacted the price of new products, has been removed.  We would also highlight that there are other ways that customers may be able to save from tariffs on the market, but crucially these savings today are available to all customers rather than just a select few.

We therefore strongly urge Ofgem to reconsider this proposal and put on hold any final decision on the future of BAT until the review of the long-term role and design of price protection has concluded. This will also allow any direction from the next Government to be taken into consideration.