Ofgem moves to end dominance of big six firms

Suzie Neuwirth
ENERGY regulator Ofgem yesterday outlined its plans to “break the stranglehold of the big six” energy suppliers and open up the market to smaller firms, in order to boost price transparency.

Under the new proposals, the big six – British Gas, EDF Energy, E.ON, RWE Npower, Scottish Power and SSE – would face fines if they did not trade fairly with small suppliers.

They would be obliged to post the prices at which they buy and sell wholesale electricity on trading platforms up to two years in advance.

EDF Energy said yesterday that it supports “voluntary agreements between exchanges and market participants”, to ensure that products are “effectively priced” in the market.

SSE and Scottish Power said that they already have arrangements with smaller suppliers.

“We’ve already taken more action than anyone to improve the market...offering bespoke deals for smaller players in the market, which Ofgem has acknowledged in its proposals,” said an SSE spokesperson.

“We therefore support the aims behind Ofgem’s announcement, but it's important to get this right, particularly at a time when the electricity market is undergoing a series of fundamental and complex reforms.”

A new UK energy bill is currently going through the process of being ratified, with a decarbonisation target narrowly missing inclusion in a House of Commons vote earlier in the month.

Andrew Wright, senior partner for markets at Ofgem, said that the proposals would create a “fair deal” for independent suppliers, “assist investors seeking to build new generation plants” and “help secure supplies for consumers, who are also set to benefit from a simpler, clearer and fairer energy market thanks to our retail market reforms.”

But Darren Braham, founder and finance chief of independent supplier First Utility, warned that the proposals could be complex to design, implement and manage. “A self-supply restriction which forces generators to trade all their energy on the open market would be the ideal solution,” he said.