26th Feb 2014 14:09
LONDON (Alliance News) - UK regulator Ofgem announced plans to, "bear down as hard as possible on energy prices," as it breaks down barriers to competition in the UK market.
The regulator said that, under new rules which will come into place from March 31, the six largest energy suppliers in the UK must trade fairly with independent suppliers or face financial penalties and must post the prices at which they will trade wholesale power at up to two years in advance.
Ofgem also said a range of measures will make the annual statements of the large companies more robust, useful and accessible.
"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," Ofgem Chief Executive Andrew Wright said in a statement.
Ofgem said that when selling their power in the wholesale market, the companies will have to publish their prices daily, in two one-hour windows, giving independent suppliers the chance to buy power in advance at a better price.
The regulator said it has told suppliers to bring forward publication of future statements by two months and to ensure those statements are fully and independently audited, starting from their 2014 statements.
Energy prices are turning into a political football ahead of the next election. Dwindling household budgets are set to become one of the main features of party campaigns as wage growth remains low while things like energy prices increase at rates well above inflation.
The increases have prompted a storm of protest from consumer groups, and politicians of all parties. The protests were stoked when Ofgem said that wholesale prices have risen by less than the rate of inflation and that its data suggests that wholesale electricity and gas together have risen by just 1.7% over the last year.
UK Prime Minister David Cameron recently announced a review of energy pricing and competition in the commons, while the Conservative leader has also pledged to cut green taxes next year.
Opposition leader Ed Miliband has said Labour will freeze energy prices for two years if the party is elected to power in 2015, prompting energy companies to warn that they may not be able to fund investments and warnings from critics who say companies may raise prices even more ahead of any freeze.
The big six energy companies in the UK are British Gas, E.ON SE, EDF Energy PLC, RWE Npower PLC, ScottishPower Ltd and SSE PLC.
"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," Secretary of State for Energy and Climate Change Edward Davey said in a statement.
Centrica shares were down 0.6% to 318.20 pence while SSE shares were down 1.0% to 1,420.00 pence Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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