Energy regulator Ofgem has pledged to “break the stranglehold” of the Big Six electricity suppliers over the retail market in a bid to bring down prices.
It plans to open up the market to smaller electricity suppliers by threatening the Big Six with fines unless they trade fairly with them and are more transparent about wholesale prices.
The rules will apply to large independent generators without retail arms, such as Drax and GDF Suez, as well as the Big Six — British Gas owner Centrica, SSE, Scottish Power, npower, EDF and E.ON.
Under the proposals, the Big Six, which generate 80% of Britain’s electricity and supply 99% of households, will have to publish the prices at which they buy and sell electricity up to two years in advance. They will also be required to sell power to small suppliers at a fair price and negotiate fairly with them or face penalties.
Many smaller independent suppliers, including Co-operative Energy, Ecotricity, Ebico and First Utility, do not generate their own electricity and rely heavily on the Big Six.
“Ofgem’s proposals will break the stranglehold of the Big Six in the retail market,” said Andrew Wright, the regulator’s senior partner for markets.
“Our aim is to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market.”
He added that the move should also “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”.
