Ofgem proposes activating Market Stabilisation Charge

Ofgem opened a two-week consultation on 16 October proposing activation of the Market Stabilisation Charge (MSC) licence condition. Ofgem regulates energy markets in Great Britain, including Scotland. It says sharp wholesale price falls could prompt customers to leave price-capped tariffs while suppliers hold energy hedges bought in advance, leaving the suppliers with losses.

Under the proposal, a supplier gaining a customer would pay part of the stranded-hedge value to the supplier losing that customer. Ofgem proposes retaining the previous parameters: a 10% price-fall trigger and compensation for 85% of hedge value beyond that trigger. The charge is not yet active: Ofgem expects to decide after reviewing responses, with any activation following a later decision and notice. If adopted, it expects the charge to remain through winter, likely until March 2027. Responses are due by 29 October.