Ofgem to crackdown on Big Six energy suppliers in bid to cut electricity prices

 

Electricity prices are set to fall after the energy regulator pledged to “break the stranglehold” of the Big Six energy suppliers.

Ofgem has threatened energy firms with cash fines unless they become more transparent about wholesale prices.

Energy experts said the change would open up the market to smaller firms. “The move should pave the way for new suppliers to come into the market, creating more choice and competition, which should ultimately translate into lower prices for consumers,” said Ann Robinson, director of consumer policy at uSwitch.

Richard Hall, head of energy regulation at Consumer Futures, said: “It’s been long overdue for Ofgem to intervene to promote liquidity in the wholesale power market. “Liquidity creates open markets in which new players in generation and supply can compete against the dominant players – and put downward pressure on costs.”

However Matt Osborne, an energy analyst at Inenco, said the move was unlikely to change the monopoly of the Big Six firms, which generate 80 per cent of Britain’s electricity and supply 99 per cent of households.

“This is a step in the right direction in terms of making a level playing field in terms of wholesale pricing, but is not a silver bullet for small suppliers who still face the problem of significant customer inertia, whereby a large proportion of customers still do not actively switch suppliers.”

Under the new proposals the Big Six suppliers – British Gas, EDF, E.on, Npower, SSE and Scottish Power - 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 at all times or face penalties.

Many of the smaller independent suppliers – such as Co-operative Energy, Ecotricity, Ebico and First Utility - do not generate their own electricity and are therefore forced to rely heavily on the prices set by the Big Six.

However, the rules will also apply to large independent generators without retail arms, such as Drax and GDF Suez.

“Ofgem’s proposals will break the stranglehold of the big six in the retail market,” said Andrew Wright, senior partner for markets at Ofgem. “Our aim is to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market.”

Energy secretary Ed Davey said the Government would introduce new laws if necessary to ensure Ofgem’s proposals are implemented.

“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,” Mr Davey said. “Government stands ready to use the Energy Bill to take necessary measures to improve energy market liquidity should Ofgem’s proposals be delayed or frustrated.”

It’s already been a decade since smaller firms first complained about transparency in pricing. “We have found smaller players complaining about market access since 2003,” reported Richard Hall of Consumer Futures.

“It was first acknowledged as a problem by the regulator in 2005, and Ofgem has been working to tackle it “urgently” – its words – since 2008!”

Since then there have been many proposals and the industry is still proposing alternative approaches. In fact there has already been speculation that the major players may appeal the proposals to the Competition Commission.

Indeed, Angela Knight CBE, Chief Executive of Energy UK, a body which represents energy companies, gave the news of the proposals a lukewarm reception. "Effective and transparent wholesale energy markets can deliver benefits for customers,” she conceded. But she added: “More work needs to be done on these proposals and the energy industry is keen to have further discussions.”

That could mean yet further delays are in store for consumers looking forward to cheaper power.

PROMOTED VIDEO
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
News
i100
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
News
In other news ... Jon Snow performed at last year's Newsroom's Got Talent charity event
people
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Text messaging changes as a relationship evolves
life
News
The comedian, 42, made the controversial comment following the athlete’s sentencing to five years for the culpable homicide of Reeva Steenkamp on Tuesday
peopleComedian's quip about Reeva Steenkamp was less than well received at music magazine awards
Sport
Cristiano Ronaldo in action for Real Madrid
football
News
peoplePerformer had recently been diagnosed with prostate cancer
Life and Style
food + drink
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?