The Energy Advice Line has welcomed plans by Ofgem to fine Britain’s biggest energy companies if they fail to trade power with smaller rival companies.
Julian Morgan, managing director of the UK’s leading business energy price comparison, switching and advice service for energy users, said increased competition in the energy market was urgently needed to help put the brake on spiraling gas and electricity prices.
Ofgem announced last week it would force power companies to publish the prices they were prepared to buy and sell energy two years ahead. They would not be allowed to refuse “reasonable” requests from small suppliers that wanted to buy power from them.
Ofgem would also have the power to penalize those companies that did not trade fairly.
“These initiatives by Ofgem are certainly a step in the right direction and they are long overdue,” Mr Morgan said. “At the moment, consumers are not feeling the benefits of a competitive energy market because the market is not truly competitive.
“The Big Six energy companies both generate and supply power, and smaller independent suppliers feel blocked out of the market. It isn’t a level playing field.
“But for these reforms to be effective, Ofgem needs to ensure that the penalties for non-compliance are significant enough to act as a deterrent. The Big Six are very large and financially powerful organisations.“
Mr Morgan said the regulator also needed to create incentives to encourage smaller energy suppliers to enter the market by easing onerous regulatory and financial requirements that were beyond the scope of small players.
“Many smaller companies that would like to enter the energy supply market simply don’t have the financial resources to make a bid,” Mr Morgan said. “At the moment, the Big Six hold all the cards.”
He agreed with the analysis of some smaller suppliers that the reforms would not address other significant obstacles to smaller players entering the market.
“I think a more radical overhaul of the wholesale market is in order if Ofgem and the government are serious about eliminating the so-called ‘stranglehold’ the Big Six have on the market.”
The Energy Advice Line is a leading impartial electricity price comparison and switching service for businesses and domestic energy users. It actively campaigns for reform of the UK’s energy market to give all consumers a fairer deal and cheaper prices from the major suppliers.
It also offers a free and independent price comparison and switching service that enables consumers to shop the market and identify the cheapest available deal with a few computer clicks.