UK energy regulator Ofgem has responded to government calls for a fairer and more transparent energy sector by announcing tighter rules on reporting and the management of the wholesale market.
Ofgem will force the UK’s Big Six gas, water and electricity companies to give a more detailed account of how they trade electricity between their generator businesses and their household supply arms “to consider whether this is being done appropriately”.
The move forms part of an Ofgem initiative to ensure consumers are able to compare providers to get the best deal.
The new rules also aim to make the wholesale market more transparent.
The big six suppliers – Centrica, SSE, RWE npower, ScottishPower, E.On and EDF Energy – will need to publish their annual statements two months earlier and have them scrutinised by an independent auditor to “allow more detailed and timely scrutiny of suppliers’ activities”.
Under the new rules, which will come into effect on March 31, the energy companies will not be able to refuse any “reasonable” requests from small suppliers to buy electricity.
They will also face financial penalties if they don’t comply.
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.
Ed Davey, secretary of state for energy and climate change, called the rules a “big step forward in creating a fairer, more competitive energy market in the UK”.
“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.”
A spokesman for the trade association Energy UK said: “The energy industry believes a better working wholesale market can bring about better results for our customers.
“The sector, across members of all sizes, has worked with Ofgem on these measures and will continue to be active partners as the reform package rolls out.
“Ofgem already receives information about costs and trading and we are working together on ways to make our information more easily and widely available.”
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