12 Jun 2013
In a bid to drive down energy prices for hard pressed customers, Ofgem is proposing that the six major energy suppliers, Centrica, E.ON, SSE, Npower, EDF and ScottishPower trade more transparently with smaller independent suppliers or face cash penalties if the fail to follow the new rules.
The ‘Big Six’ have a significant amount of industry power and currently generate 80% of Britain’s electricity supplying around 95% of it to their customers. This is creating a barrier for smaller suppliers to buy and sell energy and access long-term contracts. Under the new proposals, the major suppliers will be prevented from refusing requests to sell energy and be required to publish their electricity prices up to two years in advance. This will allow smaller suppliers such as Co-operative Energy, Ecotricity, Ebico and First Utility to buy electricity and gain entry into the wider market. It will also increase market competition which, in turn will help reduce energy prices for customers as well as encourage more investment in new power generation plants.
Andrew Wright, Senior Partner for markets at Ofgem, said “Our aim is to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market. “Ofgem’s proposals will break the stranglehold of the big six in the retail market and create a more level playing field for independent suppliers, who will get a fair deal when they want to buy and sell power up to two years ahead”.
Energy Secretary Ed Davey said the Government was ready to bring in new laws should the new measures be ‘delayed or frustrated’. He urged the industry to work with Ofgem to implement the proposals “as swiftly as possible”. “An increased role and level playing field for independent suppliers and generators is precisely what will help drive the competition that delivers better value for consumers and businesses. Ofgem’s proposals to increase transparency in the way electricity is traded will give independent generators a foothold in the UK energy market and encourage new players to invest. I encourage companies to work with Ofgem to implement these proposals as swiftly as possible”.