Big six energy utilities hit by Ofgem threat

City A.M. Reporter
BRITAIN’S six largest utilities face tough retail power market reforms next year that could force them to auction off more than one fifth of electricity they produce, energy regulator Ofgem announced yesterday.

The regulator proposed in March that it could impose power production auctions of up to twenty percent of generation on the Big Six utilities -- Scottish and Southern Energy, Centrica, Iberdrola’s, Scottish Power, RWE npower, EDF Energy and E.ON UK.

But Ofgem’s three-month consultation showed some respondents, especially smaller power suppliers such as First Utility, favour full production auctions to prevent large utilities from supplying and producing power at the same time.

“Some people think the figure should be higher so we’re undertaking further analysis and will come up with an impact analysis later this year. It’s important to us that the volume is efficient enough to have an impact on liquidity,” a spokesperson for Ofgem said.

The reforms are expected to come into force next year, but exact timing depends on whether the utilities will refer proposals to the Competition Commission.

Ofgem said suppliers were cooperating well and that it was unlikely any of them would be referred to the Competition Commission, but added they still risk referral if they fail to comply with reforms at a later stage.