Question to the Department for Energy Security & Net Zero:

To ask His Majesty's Government what is Ofgem's rationale for consulting on introducing a market stabilisation charge, given concerns raised by external experts that the proposal could penalise consumers for making switching decisions, particularly when the energy price cap is expected to rise significantly over the next six months.

The decision to re-introduce a market stabilisation charge is a matter for Ofgem as the independent regulator.

The Market Stabilisation Charge (MSC) involves a payment from a supplier who gains a customer to a supplier who loses that customer, to partially mitigate losses on wholesale energy that the losing supplier had already bought. Ofgem considers that having the MSC as a backstop measure is in the broad interests of consumers, as it will support responsible hedging and market stability.

Ofgem’s full rationale for the consultation can be found in their consultation document published on 16 October.