Energy bills look to stay high until 2026

Households across the UK face paying above the odds for energy until 2026, as regulator Ofgem plans to extend rules that keep prices high.

The move has sparked concern among those who are already struggling with the rising cost of living.

The ban on acquisition-only tariffs

Ofgem introduced the 'ban on acquisition-only tariffs' (BAT) in October 2022 to stop energy firms from undercutting one another to sign up new customers as prices soared.

The rules were brought in to protect the energy market and avoid a repeat of the 2021 widespread collapse of gas and electricity firms.

Why are energy bills still high?

With the BAT in place, energy firms can’t offer cheaper deals to new customers unless they also offer them to existing ones.

It means providers have no incentive to bring back cheaper fixed-rate deals, instead relying on more expensive gas and electricity deals which are limited by Ofgem’s price cap.

The result? Households are paying above the odds for their energy, with no immediate relief in sight. Energy bills have reached £1,717 a year for the typical home – the level of the price cap.

Ofgem's plans to extend the BAT

Originally, Ofgem planned to scrap the BAT in October 2024.

But they’ve now extended that date to at least 31 March 2025 and for now, plan to keep it in place until March 2026.

Ofgem's reasoning for doing this is so customers don’t face a 'loyalty penalty', where prices are hiked unless they switch to a different firm.

The regulator also says keeping the BAT is beneficial for customers in debt who can’t change provider but can still access cheaper deals with their current energy firm.

The impact on consumers

Although Ofgem’s moves aim to protect customers, extending the BAT will add to many households’ money worries as it means delaying the return of competitive fixed-rate energy deals – the main hope for our bills to fall to more 'normal' levels.

Check out our guide on what to do if you’ve fallen behind on your energy bills or you’re worried about the cost of heating your home.