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Ofgem 'big six' penalties branded useless

New rules aimed at opening energy industry to small firms 'fall well short' of what's needed

Toothless energy watchdog Ofgem was mocked yesterday over new rules to hit the big six with penalties if they do not open trade up to smaller companies.

Ofgem wants to ensure firms such as British Gas and the largest independent generators trade fairly with other suppliers 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 to compete with the largest energy suppliers.

Ofgem chief executive Andrew Wright said: “Almost two million customers are with independent suppliers, and we expect these reforms to help these suppliers and any new entrants to grow.”

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.

Energy Secretary Ed Davey said the plans were a “big step forward” in creating a fairer, more competitive energy market in Britain.

But shadow energy and climate change secretary Caroline Flint said the proposals “fell well short of what is needed.”

She said: “Instead of simply stopping energy companies doing secret trades between the generation and retail parts of their businesses, 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.”

Labour plans to break the big six up even further after the next election. However for many the plans are in the wrong direction.

A number of Labour MPs including Kelvin Hopkins and campaign groups such as Fuel Poverty Action, Campaign for Public Ownership and National Pensioners Convention believe the energy companies should be nationalised and made accountable to Parliament.

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