Energy regulator Ofgem says it is “tearing down barriers to competition” with the introduction of new rules to benefit independent suppliers in the energy sector.
Under the new rules, the “big sex” energy suppliers and the largest independent generators will have to publish the price at which they plan to sell wholesale power up to two years in advance, with the prices published daily.
Ofgem CEO Andrew Wright said:
“Our rules for a simpler, clearer, fairer energy market are coming into force, meaning that it is getting easier for consumers to pick out the best deals. Now we are also breaking down barriers to competition for new entrant suppliers. These reforms give independent suppliers, generators and new entrants to the market, both the visibility of prices and opportunities to trade that they need to compete with the largest energy suppliers. Almost two million customers are with independent suppliers, and we expect these reforms to help these suppliers and any new entrants to grow.”
Secretary of State for Energy and Climate Change Edward Davey said:
“This is a significant and welcome toughening up of competition in electricity markets. By making these wholesale prices more transparent, it will help reveal how the Big Six energy companies are trading, and make it easier for new competition to challenge their business model.”
However, critics have complained that they do not do enough to fix the UK’s “broken energy market” and will not have a noticeable effect on consumer bills.
Caroline Flint MP, Labour’s Shadow Energy and Climate Change Secretary, said:
“Any reforms to improve transparency and competition in the energy market are to be welcomed, but Ofgem’s proposals yet again fall well short of what is needed.
Instead of simply stopping energy companies doing secret trades between the generation and retail parts of their businesses, as Labour has proposed, Ofgem is tinkering around the edges with a whole host of complicated interventions which will be difficult to properly monitor and enforce.”
These changes are the response to the public outcry after each of the big six energy firms pushed up the prices to consumers while posting record profits in the run up to Christmas last year.