Financial News

  • 27 February 2014, 17:02

Energy Bills: New Rules To Boost Competition

The energy regulator has announced new rules to try to boost competition between household suppliers and provide greater clarity for bills.

Ofgemhas confirmed that new regulations due to be implemented at the end of next month will force the so-called Big Six energy suppliers to publish their wholesale generation prices to independent suppliers up to two years in advance.

The move is aimed at making it easier for smaller competitors - who do not produce their own energy - to budget better, while giving consumers more information on the charges they face.

Ofgem said that a failure to ensure fair trade in the wholesale market will result in financial penalties, while a range of other measures would result in the annual statements produced by the large companies being more "robust, useful and accessible".

The Big Six - British Gas, SSE, ScottishPower, npower, EDF and E.ON - endured a fresh public and political backlash on bills last year when inflation-busting increases were announced ahead of winter - rises that were later reduced when green levy costs were stripped from bills.

The row resulted in greater Government pressure on Ofgemto act on competition and price clarity.

Its chief executive, 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.

"We also want to ensure that information on revenues, costs and profits of the largest energy suppliers is as clear as possible for consumers."

Energy Secretary Ed Daveyadded that the moves were a "big step forward" in creating a fairer, more competitive energy market in the UK.

He 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."

Labour argued that the reforms did not meet the country's demands for a fair market.

Shadow energy secretary Caroline Flint 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."

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