Ofgem today announced that it proposes to establish a more competitive energy market by making it a ‘more level playing field’ for smaller, independent suppliers and to make it easier for the big six to compete amongst themselves.
Transparency for all
The energy regulator aims to accomplish this by introducing proposals that add transparency to the whole market. It will now require that the big six publish the prices at which they buy and sell wholesale electricity for two years in advance. They are obligated to trade at these prices, and if they do not, Ofgem will use its powers to fine companies not complying.
This will make the market clearer to big and small suppliers alike, and create more opportunity for independent suppliers to trade effectively.
Boosting consumer confidence
Andrew Wright, Senior Partner for Markets at Ofgem, noted that by putting the pressure on prices and increasing competition in the energy market, consumer confidence will be improved:
“Ofgem’s proposals will break the stranglehold of the big six in the retail market and 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.
“Greater price transparency will assist investors seeking to build new generation plant and help secure supplies for consumers, who are also set to benefit from a simpler, clearer and fairer energy market thanks to our retail market reforms.”
Paving the way for new suppliers, lower prices
The news was also welcomed by Ann Robinson, Director of Consumer Policy at uSwitch, the energy price comparison website:
“This is exactly the shot in the arm that the competitive market needs if it is to start working effectively for consumers. Today’s 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.
“Greater transparency should also lead to greater consumer confidence and reassurance that the price people are being asked to pay is fair. At the moment it is very difficult for anyone to be certain one way or another because forward pricing has been so opaque. These steps should see competition shift up a gear and then we will really be able to see exactly what it can deliver for hard-pressed consumers.”