Market Stabilisation Charge
Summary
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Latest update and next planned activity
Date of latest update
Latest Update
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Impacts Overview
Impacted Consumers
Electricity
Gas
Domestic
Impacted REC Parties and Market Participants
Energy Supplier
Impacted REC Documents
REC Main Body
Impacted REC Services
Central Switching Service (CSS)
Priority and rationale
High
Priority last updated on 29 May 2026
Solution development
Problem Statement
Following the publication of Ofgem’s decision on potential short-term interventions to address risks to consumers from market volatility, the Market Stabilisation Charge will be introduced via the modified Standard Licence Condition 24A. A change is needed to the REC to give effect to the Market Stabilisation Charge from 14 April 2022.
Proposed solution summary
- As the Authority, I want the necessary changes made to the Retail Energy Code to introduce the MSC obligations, so that the new MSC licence obligations on Energy Suppliers can be effectively discharged by RECCo.
No documents available.
Change Plan
Preliminary Change Report issued
Completed
Start:
21 Feb 2022Due:
04 Mar 2022Completion:
04 Mar 2022Consultation issued (5 WD)
Completed
Start:
04 Mar 2022Due:
04 Mar 2022Completion:
04 Mar 2022Final Change Report issued
Completed
Start:
04 Mar 2022Due:
18 Mar 2022Completion:
18 Mar 2022Responsible Committee decision (ex-Committee)
Completed
Start:
18 Mar 2022Due:
23 Mar 2022Completion:
23 Mar 2022Authority determination
Completed
Start:
23 Mar 2022Due:
08 Apr 2022Completion:
08 Apr 2022Original submission
Change details
Henry Kemp Kemp - -
21 Feb 2022
Change details
Market Stabilisation Charge
On 16 February 2022, Ofgem announced a requirement for suppliers to pay a Market Stabilisation Charge when acquiring new customers from 14 April 2022.
A supplier gaining new customers will pay a charge to the suppliers losing them. This charge will only take effect if wholesale prices fall significantly below the level used to set the price cap from April (parameters set by Ofgem)
A supplier gaining new customers will pay a charge to the suppliers losing them. This charge will only take effect if wholesale prices fall significantly below the level used to set the price cap from April (parameters set by Ofgem)
RECCo will be responsible for developing an invoicing and billing mechanism that delivers a value for money solution for suppliers (and ultimately consumers) to give suppliers entitled to payments under the MSC confidence that funds will be transferred in a reasonable timeframe.
This measure must be implemented by RECCo successfully to enable suppliers to recover the legitimate and efficient costs they have incurred in purchasing energy for their customers in the event that customers switch away if wholesale market prices drop. If this measure is not successfully implemented this could result in supplier exit from the market.
Please see Ofgem publication decision document and associated guidance:
https://www.ofgem.gov.uk/publications/decision-short-term-interventions-address-risks-consumers-market-volatility
https://www.ofgem.gov.uk/publications/decision-short-term-interventions-address-risks-consumers-market-volatility
Impacts
Electricity, Gas, Domestic Prepayment, Domestic Credit
Switching experience, Trust and confidence
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REC Main Body
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No details provided
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No details provided
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No details provided
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No details provided
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Central Data Service Provider Further Services, Central Switching Service (CSS)
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Energy Suppliers
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No details provided
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No
No details provided
Priority & timing
Yes
Under the licence notice change there is 56 day period from publication of decision to the point of which the market stabilisation charge licence condition can come into effect – 14th April 2022
The Market stabilisation charge may not be triggered at this point but the process, systems and people must be in place to operate this charge from this point forward.
The Market stabilisation charge may not be triggered at this point but the process, systems and people must be in place to operate this charge from this point forward.
Under the licence notice change there is 56 day period from publication of decision to the point of which the market stabilisation charge licence condition can come into effect – 14th April 2022.
The Market stabilisation charge may not be triggered at this point but the process, systems and people must be in place to operate this charge from this point forward.
It is however expected that back billing to suppliers will be required as such mechanisms RECCo will not be able to put in place by 14th April.
The Market stabilisation charge may not be triggered at this point but the process, systems and people must be in place to operate this charge from this point forward.
It is however expected that back billing to suppliers will be required as such mechanisms RECCo will not be able to put in place by 14th April.
Wholesale market prices and the rate of which they rise or fall will dictate when the market stabilisation charge will be triggered and therefore supported by RECCo for supplier billing.
No details provided
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Activity
Implementation Date has been updated to 14 Apr 2022.