Energy watchdog Ofgem has set out a road map of reforms aimed at increasing competition in the electricity market and loosening the grip of the ‘big six’ providers.
The regulator is proposing that the major companies be forced to auction 25 per cent of the energy they generate – up from the 20 per cent target suggested previously – equating to almost half of the total power used in UK homes.
The plans would also require the ‘big six’ to sell a range of different products “so independent suppliers would be able to hedge their positions more effectively on the forward markets and therefore compete on a more level playing field,” Ofgem said.
Senior partner for markets Andrew Wright said: “Since Ofgem announced that the big six companies needed to change radically their ways, they have made progress.
“We have seen pledges to simplify tariffs, moratoriums on doorstep sales and now auctioning of power in the short term market. This is to be welcomed.
“However, the needs of independent suppliers have not yet been met and this is why Ofgem is proposing to introduce mandatory auctions to force the pace of change and increase transparency.”
Consultation on the proposals are due to end in the summer, when Ofgem expects to publish its final reforms.