Ofgem bids to break 'stranglehold' of big six energy suppliers

Industry watchdog demands big suppliers provide wholesale power to small rivals and detail prices two years in advance

The industry watchdog, Ofgem, is demanding big six energy suppliers provide wholesale power to smaller rivals and detail prices up to two years in advance in a move to break their "stranglehold" of the market and force down household bills.

The government and consumer groups welcomed the measures but some critics claimed they did not go nearly far enough while others expressed frustration it had taken Ofgem five years to act.

There has been rising public and political anger about high prices and the dominant role of large suppliers such as British Gas, SSE and npower exacerbated by a series of investigations by Ofgem and the European commission into possible manipulation of wholesale energy markets.

"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," said Andrew Wright, senior partner for markets at Ofgem which first promised to act in 2008.

"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."

Ed Davey, the secretary of state for energy and climate change, believed an increased role and level playing field for independent suppliers and generators would deliver "better value" for consumers and businesses.

"I encourage companies to work with Ofgem to implement these proposals as swiftly as possible. Government stands ready to use the Energy bill to take necessary measures to improve energy market liquidity should Ofgem's proposals be delayed or frustrated."

First Utility, one of the smaller firms trying to break into the market, said that the measures would help it compete more effectively with the big six energy companies but urged Ofgem to follow up with further action to create a truly competitive wholesale market.

Richard Lloyd, executive director of consumer group Which?, said efforts by to make the markets more competitive were welcome but demanded more radical action.

"We want Ofgem and the government to conduct a more fundamental review into whether the wholesale energy markets are fit for purpose," he argued. "This should look at whether the structure and dominance of the largest companies is hampering competition in these markets and undermining fair prices for consumers."

In a separate development Bob Dudley, the chief executive of BP, said he had no idea what the European competition authorities were looking for in their recent dawn raids – or "inspections" as he called them – of his own and two other oil groups.

He would be "very surprised" if oil markets, dominated by physical as opposed to more speculative paper trades, showed any similarity to the financial ones hit by the Libor scandal, Dudley added.

He was speaking at BP's annual statistical review of the global energy markets, where he also said shale gas in Britain was at a very early stage but might eventually create an "economic boom".

Contributor

Terry Macalister

The GuardianTramp

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