What it means for youHousehold bills
Ofgem may switch on a charge that affects people who change energy supplier this winter
Ofgem is consulting until 29 October on activating its Market Stabilisation Charge. It would only kick in if wholesale prices fall sharply, and could make some switching deals a little dearer.
Published 27 October 2026Last checked 27 October 2026England, Scotland, WalesFrom Ofgem
Illustration generated with AI
What's happening
Ofgem, the energy regulator for England, Scotland and Wales, is consulting on switching on its Market Stabilisation Charge (MSC) for this winter. If wholesale energy prices fell sharply, a supplier that gains a customer would pay part of the old supplier's losses on energy it had already bought. The payment is made between suppliers, but Ofgem says it would create extra costs for people who switch. The consultation closes on 29 October 2026 and Ofgem expects to decide in mid-November.
The question: What is Ofgem's Market Stabilisation Charge, when would it apply, and what could it mean for households who switch energy supplier or fix this winter?
The policy
- Announced by
- Ofgem
- Announced on
- 16 October 2026
- Stage
- consultation
- Takes effect
- Decision expected mid-November 2026; would start after at least one full working day's notice
- Household staying with its supplier: No charge, because it is only paid when a customer switches.
- Household switching to a new supplier's fix after a sharp price fall: Likely to see the charge built into the deal. Ofgem's main illustration puts it at £65 for a dual fuel customer.
- Household switching while prices are steady or rising: The charge is not triggered unless wholesale prices fall more than 10%, so nothing changes.
This applies to you if…
- You get gas or electricity in England, Scotland or Wales
- You are thinking of switching supplier, or taking a fix with a new supplier, this winter
- You follow energy prices and switch when deals look cheaper
Not for you if…
- Households who stay with their supplier. Ofgem says the extra costs fall on consumers who switch
- Households in Northern Ireland, where Ofgem does not regulate energy prices
What it's worth
Ofgem MSC activation consultation, 16 October 2026, Table 2: 'MSC received per customer who switches (£/dual fuel customer)' of £65 in its main scenario, where prices rise 20% further over one month, and £134 where prices stay at their peak for a month longer. These are illustrations, not forecasts.
Tax year Winter 2026 to 2027
How the charge would work, in Ofgem's words
- Suppliers buy energy months ahead for their price cap customers. Ofgem says they hold it for around four and a half months on average.
- If wholesale prices then fall more than 10%, a customer who leaves can get a cheaper deal elsewhere and the old supplier is left with energy it paid more for.
- With the charge active, the new supplier pays the old supplier 85% of the value of that stranded energy beyond the 10% fall.
- The new supplier may build that cost into the deals it offers to switchers.
Switching can still save money, but the saving is smaller while the charge is triggered.
Simplified from Ofgem's consultation. The exact method is in Ofgem's draft guidance.
How to do it
- 1
- 2
Respond if you want to have your say
Ofgem asks for responses by email to priceprotectionpolicy@ofgem.gov.uk by 29 October 2026. The document says it wants to hear from anyone interested. It will publish non-confidential responses.
Takes about 30 minutes
- 3
If you are comparing deals, compare total yearly cost
Look at unit rates, standing charges and exit fees against your own yearly use, whatever the charge does.
Takes about 30 minutes
Deadline
Consultation closes — 29 October 2026 (in 2 days)
Ofgem expects to decide in mid-November 2026. If it goes ahead, the charge would start after at least one full working day's notice.
The catches
It only bites when prices fall
The charge is triggered by a fall of more than 10% in wholesale prices. Ofgem will publish a weekly update saying whether it is triggered for gas or electricity.
Fixed deals may cost a bit more
When the charge ran before, Ofgem says fixed tariffs on offer were priced slightly higher than they would otherwise have been.
No end date
Ofgem is not proposing a fixed duration. It expects the charge to stay active for several months, likely at least until the end of March 2027, with switching off subject to another consultation.
It applies whatever tariff you leave
Ofgem says it applies to all customers who switch supplier, regardless of which tariff they leave.
Illustrative example
Two neighbours in a falling market
Imagine wholesale prices drop sharply in January after the charge is switched on. Neighbour A stays on her supplier's standard tariff. Neighbour B looks for a cheaper fix with another supplier.
- Neighbour A stays on the price cap. The charge is only paid when a customer switches, so it does not apply to her.
- Neighbour B finds new deals priced lower than before the fall, but the new supplier has to pay her old supplier part of its losses.
- In Ofgem's main illustration, that payment is about £65 for a dual fuel customer, so B's saving from switching is smaller than it would have been.
Switching may still save money, just less than it would without the charge.
Illustrative example based on Ofgem's own scenario figures. Real deals depend on prices at the time and each supplier's pricing.
Common misreadings
You might hear: Everyone's bill will go up because of this charge.
Actually: The charge is paid when a customer switches supplier while it is triggered. Ofgem says it creates extra costs for consumers who switch.
You might hear: You will get a separate bill for the charge if you switch.
Actually: The payment is made between suppliers. Ofgem says it is not an upfront cost to consumers, though suppliers can reflect it in their prices.
You might hear: Switching will no longer be worth it.
Actually: Ofgem says the charge only covers part of a price fall and does not generally remove savings from switching.
Where the UK nations differ
- England, Scotland and Wales
- Ofgem regulates energy suppliers here, so the charge would apply.
- Northern Ireland
- Ofgem does not regulate household energy in Northern Ireland, which has its own regulator and market.
What you could do
want to respond to the consultation
Email your views to Ofgem by 29 October 2026.
By 2026-10-29
are already planning to switch or fix this winter
Compare deals on their total yearly cost for your usage and check the exit fees.
are struggling with energy bills
Ask your supplier about payment support and check whether you can get the Warm Home Discount.
Timeline
16 October 2026
Consultation opens
29 October 2026
Consultation closes
Responses by email to Ofgem.
25 November 2026
Ofgem announces the January to March 2027 price cap
The detail
The rules
- The charge is a payment from the supplier gaining a customer to the supplier losing that customer.
- Proposed trigger: a 10% price fall. Proposed share: 85% of the value of the stranded hedge beyond that point.
- Ofgem publishes a weekly update on whether the charge is triggered for either fuel.
- Ofgem used a charge like this in 2022, extended it in 2023 and let it lapse in March 2024.
- Ofgem says wholesale prices have risen since July to around 200p a therm, about 150% above pre-conflict levels.
References
- Ofgem consultation, paragraph 5.5: Trigger at a 10% price fall, with 85% of the value beyond that point paid.
- Ofgem consultation, paragraph 5.16: Applies to all customers who switch supplier, regardless of the tariff they leave.
- Ofgem consultation, paragraph 5.35: Likely to stay active at least until the end of March 2027.
Words explained
- Wholesale price
- The price suppliers pay for gas and electricity before it reaches your home.
- Hedging
- Buying energy months in advance to keep prices steady.
- Price cap
- The most a supplier can charge per unit and per day on a standard variable tariff in England, Scotland and Wales.
- Dual fuel
- Getting both gas and electricity from the same supplier.
In short
Ofgem may switch on a charge that only applies if wholesale energy prices drop sharply. Then your new supplier pays your old one part of its losses, which can make switching deals a bit dearer, around £65 in Ofgem's main example. If you stay put, you don't pay it. A decision is due mid-November.
Related dates
- 29 Oct Ofgem Market Stabilisation Charge consultation closesDeadline · in 2 days
- 25 Nov Ofgem announces the January to March 2027 price capAnnouncement · in 29 days
- 1 Jan New energy price cap takes effectChange · in 66 days
- 23 Feb Ofgem announces the April to June 2027 price capAnnouncement · in 119 days
- 26 Feb Warm Home Discount helpline deadlineDeadline · in 122 days
- 31 Mar Temporary removal of VAT on household electricity endsChange · in 155 days
Sources
- Market Stabilisation Charge activation, Ofgem (2026-10-16)
- MSC activation consultation document, Ofgem (2026-10-16)
- Switching energy supplier, Citizens Advice
- Ofgem could activate Market Stabilisation Charge, Energy Live News (2026-10-19)
This is guidance, not regulated financial advice. Check figures against the linked official source before you act. Written with AI assistance and checked against primary sources. How Kitty works. For free, impartial help, try MoneyHelper or Citizens Advice.