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Ofgem to fine Big Six if they breach financial regulations

THE UK's Big Six energy suppliers are to be hit with financial penalties if they fail to meet new rules aimed at helping smaller firms break into the market.

Regulator Ofgem wants to ensure the Big Six and the largest independent generators trade fairly with others in the wholesale market.

Under new rules from the end of next month, they will have to open up their finances to more scrutiny, including publishing the price at which they will trade wholesale power up to two years in advance.

These prices will be published daily in two one-hour windows, giving independent suppliers and generators the opportunity to buy power more effectively in the forward market.

Margaret Lynch, chief executive of Citizens Advice Scotland, said the rules mean more competition, "which hopefully will mean lower bills and increased transparency, giving customers a fair deal".

She added: "There is more that should be done to open up the market and provide real support."

Since 2009, the largest energy suppliers have had to produce annual statements showing the costs, revenues and profits for their generation and supply businesses.

Ofgem will review the method used for reporting the price of electricity sold by the largest suppliers' generation businesses to their supply businesses in their annual statements, to consider whether this is being done appropriately.

Ofgem chief executive Andrew Wright said: "These reforms give independent suppliers, generators and new entrants to the market both the visibility of prices and opportunities to trade that they need."

Energy secretary Ed Davey said: "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."

Shadow energy secretary Caroline Flint, while acknowledging any reform is welcome, said: "Instead of stopping energy companies doing secret trade, as Labour has proposed, Ofgem is tinkering around the edges with a whole host of complicated interventions which will be difficult to properly monitor and enforce."

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