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, the director of consumer policy at uSwitch.
Richard Hall, the head of energy regulation at Consumer Futures, said: "It's been long overdue for Ofgem to intervene to promote liquidity and create open markets in the wholesale power market."
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 but not a silver bullet for small suppliers who still face the problem of significant customer inertia."
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.
"Ofgem's proposals will break the stranglehold of the Big Six," said Andrew Wright, a senior partner for markets at Ofgem. "Our aim is to improve consumer confidence and choice by increasing competition in the energy market," he added.
The Energy Secretary Ed Davey said the Government would introduce new laws if necessary to ensure Ofgem's proposals are implemented. "This will deliver better value for consumers and businesses," Mr Davey said.Reuse content