Energy companies are to face tighter rules after regulator Ofgem announced proposals aimed at providing greater clarity over bills for consumers.
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Ofgem will demand the so-called Bix Six energy – Centrica, SSE, RWE npower, Scottish Power, E.On and EDF Energy – give a more detailed account of how they trade electricity between their generator businesses and independent suppliers in the wholesale market.
It said that failure to comply with the new rules, which come into force on 31 March, will result in financial penalties.
Ofgem also confirmed the new regulations will ensure suppliers are obliged to publish wholesale generation prices to independent suppliers up to two years in advance in two, one-hour windows.
The plans have been welcomed by secretary of state for energy and climate change Ed Davey, who 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.”
Ofgem chief executive Andrew Wright said the new rules will guarantee a “simpler, clearer and fairer” energy market which will enable consumers to find the best deals.
“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,” he said.
“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.”
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