Ofgem has today announced its decision to uphold the ban on acquisition-only tariffs (BAT).
These tariffs provide discounted rates only to new customers.
This decision follows a consultation in May where most consumer groups and suppliers supported keeping the ban.
They argued it prevents unfair treatment of existing customers and avoids the “loyalty penalty.”
However, Richard Neudegg, director of regulation at energy comparison service Uswitch, criticised the decision.
Mr Neudegg said: “The decision to continue with the BAT is a hammer blow to households seeking cheaper energy bills, especially as a difficult winter approaches.
“The ban was introduced as a temporary measure to help stabilise the market during the energy crisis and to protect suppliers, but it has done nothing for consumers other than artificially raise prices.
“Ofgem’s own analysis concludes that retaining the BAT is ‘likely to result in net costs to consumers through increased prices’. It is disappointing to see a regulator go against the evidence, especially on choices that could bring down household bills.
“Now the market is in a more stable position, the ban is reducing the chance of suppliers from offering discounted prices and cheaper deals to both new and existing customers, at a time when they are desperately needed.
“Lifting the ban would increase the pressure for suppliers to reward their existing users with better value deals because if they don’t, another supplier could offer them something better.”
Charlotte Friel, Ofgem’s interim director for consumer protection and retail markets, said: “We have heard the voices of consumers loud and clear – and we have responded.
“The responses we received showed a strong strength of feeling against short term cut-price tariffs that shut out a supplier’s existing customers.
“Whilst competition is an important part in driving better standards, so too is consumer trust – and it is clear that denying the best deals to all risks undermining the progress we have made to restore confidence in the energy market.
“Customers have the right to vote with their feet and switch suppliers for better service, or more support, but retaining the BAT will mean that they don’t have to keep moving to chase the best rate.”
