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British regulator proposes electricity market shake-up


Britain's energy watchdog on Wednesday proposed changes to prize open the grip of big suppliers on the wholesale electricity market and increase choice for consumers.

The objective was to create "a more level playing field", over concerns about the pricing power of eight companies.

The driiving idea behind the change is to increase competition and improve opportunities for small suppliers.

Ofgem said that under its proposals the big six suppliers -- British Gas Centrica, EDF Energy, EON, RWE Npower, Scottish Power and SSE -- will have to post the prices at which they buy and sell wholesale electricity on power trading platforms up to two years in advance.

The changes were aimed also at putting pressure on Britain's two biggest independent power generators -- Drax Power Limited and GDF Suez Energy UK --while the eight indentified companies must together trade fairly with small suppliers or face financial penalties.

"Ofgem's proposals would mean that the big six and the two largest independent power generators cannot refuse any reasonable requests by small suppliers to buy electricity," the regulator said in a statement.

"They must also ensure that they sell power to small suppliers at a fair price and negotiate fairly with them at all times."

Andrew Wright, senior partner for markets at Ofgem, said the regulator wanted also "to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market.

"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," he added in the statement.

Wright said greater price transparency would also assist investors seeking to build new generation plants and help secure supplies for consumers, "who are also set to benefit from a simpler, clearer and fairer energy market".

Edward Davey, Secretary of State for Energy and Climate Change called on companies "to work with Ofgem to implement these proposals as swiftly as possible", adding that the government stood ready "to take necessary measures to improve energy market liquidity should Ofgem's proposals be delayed or frustrated".