Reforming the retail energy market will help deliver the clean power mission

We have spoken extensively in recent weeks about why we think Ofgem should not remove the existing ban on acquisition only tariffs (BAT), and we're not alone.

E.ON recently joined forces with consumer groups and other energy suppliers to remind Ofgem why the ban was, and remains, the right decision. It protects all consumers, especially the vulnerable, by ensuring that suppliers cannot restrict their best deals to just a small number of mostly affluent customers. The ban also prevents a race to the bottom through unsustainable competition that contributes to suppliers going bust at the expense of customers.

In recent research that we commissioned from YouGov, 93% of customers suggested the ban should stay in place, and we agree. But we also need to go further by pushing for a forward-looking package of retail market reforms that will help deliver the new government’s clean power mission.   

Reassessing the role of the price cap

The current price cap model will struggle to accommodate the significantly more flexible clean energy system that we can look forward to with industry reforms such as Market Wide Half Hourly Settlement (MWHHS), set to come into effect in 2026.

Ofgem recognises this, and must now work with the new government to decide on the most appropriate regulatory framework to advance an energy transition with trust, loyalty, and innovation at its core.

With this in mind, here are some of the measures we want Ofgem and the new government to take in the next 12 months.

Make the BAT permanent

There is an urgent need to postpone the removal of the BAT until Ofgem's new rules on financial resilience are properly tested, but in order to instil lasting protection from unsustainable pricing practices and ensure loyalty is rewarded, we believe the ban should ultimately be made permanent.

“It’s crucial that we have a fair market that customers can trust,” says Ramona Vlasiu, Chief Operating Officer 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.”

Introduce a social tariff

According to a government report released earlier this year, an estimated 13% of households in England are fuel poor, with the figure rising to 14% in Wales, 20% in Scotland, and 24% in Northern Ireland.

We strongly believe that no one in the UK should live in fuel poverty, and one way of ensuring this is with the introduction of a social tariff that would offer discounted prices or an energy rebate to those on low incomes or with a serious medical condition.

In 2023-24, we introduced the Winter Affordability Support Scheme to help support some of our vulnerable customers by funding up to 50% of their winter energy bills. “It was out of the question for us that people should be left to suffer in cold homes last winter,” says Ramona Vlasiu. “Our investment helped over 79,000 of our customers last winter.  But we want to see longer term solutions put in place by the Government and the regulator which are a permanent feature of the market.”

To ensure that vulnerable people are living in warm homes this coming winter, we recommend expanding eligibility and increasing the rebate for the existing Warm Home Discount Scheme.  In the longer term, government departments should share and leverage income data to better target support for those who need it most.

Driving new business models

The net zero transition should leave no one behind, and that includes those who need help to upgrade their homes. The future will require innovative new approaches such as Energy as a Service (EaaS) to help millions of UK households access cheaper, greener energy by spreading the cost of low carbon solutions over time.

Because we believe in bringing everyone along on the road to net zero, we are about to pilot an Energy as a Service scheme in the Northwest of England. Customers will be able to install solar, a battery, and a heat pump system without any initial capital costs, paying instead through a monthly subscription as they might for broadband and streaming, and they will also enjoy a complementary E.ON Next tariff to help them save money on their bills.

Ultimately, we want an energy market that offers innovative products like energy on subscription to all households, and allows them to pay for it through permanently lower energy bills. “This is how we can meet our climate targets and deliver clean, affordable energy for all,” says Ramona Vlasiu.