RECCo Preparing for Potential Return of Market Stabilisation Charge Scheme

June 2, 2026

Ofgem has decided to reintroduce the licence conditions linked to the Market Stabilisation Charge (MSC) following a recent industry consultation. While this does not mean the MSC itself is being reactivated immediately, it allows the scheme to be reactivated at pace if market conditions require it.

The decision comes as wholesale gas and electricity prices have risen significantly since the end of February 2026 due to the conflict in the Middle East. Ofgem has said there remains considerable uncertainty around future wholesale price movements and that it is important to have measures available to support market stability and protect consumers if needed.

What is the Market Stabilisation Charge?

The MSC was introduced during the energy crisis and operated from April 2022 to March 2024. It relies on the REC framework to manage the calculation, invoicing and payment process between suppliers.

The scheme was designed to reduce risks to market stability during periods of sharp wholesale price falls. Under the mechanism, suppliers gaining customers would make payments to suppliers losing customers, helping to offset the cost of energy that had already been purchased at higher wholesale prices.

Ofgem said the MSC helped encourage responsible hedging by suppliers and reduced the risk of supplier failures, which could otherwise lead to higher consumer costs.

Although the licence conditions are now back in place, Ofgem has made clear that any decision to activate the MSC would require a separate consultation.

RECCo’s role in the MSC

RECCo previously delivered the MSC payment arrangements during the scheme’s original operation from 2022 to 2024. Working closely with Ofgem, we implemented the governance, charging and invoicing arrangements needed to support the MSC within a challenging four-month delivery timescale.

Over the lifetime of the scheme, we successfully collected and distributed more than £80 million between suppliers. Further details on the operation of the original MSC scheme can be found here.

Preparing for MSC readiness

Following Ofgem’s decision, we are now engaging with the regulator on the practical steps needed to ensure the industry is ready should the MSC need to be activated again. We understand that the scheme is expected to operate in substantially the same way as version 1.0, so we do not anticipate any changes being required to Schedule 22 of the REC.

However, as highlighted in Ofgem’s decision document, the MSC depends on RECCo infrastructure and operational arrangements. Following the closure of the original scheme, we re-purposed the system’s infrastructure to deliver the Payment Method Levelisation scheme at the lowest possible cost. Work will therefore be required to rebuild and prepare the systems and processes needed to support the reintroduction of the MSC scheme.

We are now undertaking preparatory activity to support MSC readiness while ensuring implementation costs remain proportionate for industry participants. This includes:

Reviewing operational processes
Considering lessons learned from the previous scheme
Assessing the lead times required to restore the necessary systems and governance arrangements.

Based on our experience of delivering the original scheme, we currently expect implementation of the MSC to take up to four months following any decision by Ofgem to bring the scheme back into operation. However, we are working closely with Ofgem to explore whether this timescale can be reduced while still ensuring the necessary arrangements are implemented effectively and robustly. RECCo will therefore undertake proportionate preparatory activity so that it is in a position to respond promptly should Ofgem issue an instruction to implement the scheme. In the meantime, we will revise the MSC guidance and prepare materials, including the MSC invoice schedule and payment details.