Ofgem plans to make energy markets more competitive

The energy industry regulator Ofgem plans to restrict the power that the “big six” currently have over the energy market. The changes are expected to take place by early 2014.

The industry regulator believe these changes will create more competition in the wholesale market, as it stands “the big six” are responsible for 80% of Britain’s electricity and supply around 95% of it to their customers.

The changes will mean that the six largest suppliers Centrica (British Gas), E.on Energy, Scottish and Southern, Npower, EDF Energy and Scottish Power will be forced to publish the prices that they will buy and sell electricity at, up to 2 years in advance, or face cash penalties.

“Ofgem’s proposals will break the stranglehold of the big six in the retail market,” Said Andrew Wright, senior partner for markets at Ofgem. (BBC News)

Mr Wright also added that the changes should “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”.

Currently the major suppliers auction up to 30% of their power to smaller suppliers in a spot market for immediate usage, however, it is still unclear as to where the energy market will be in months or even years to come.

Under the new rules all major energy companies will now have to sell power at resonable prices and negotiate fairly with deadlines being implemented to ensure that requests are acknowledged and responded to. If they do not adhere to these guidelines then fines will be in place to penalise them.

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