UK regulator orders firms to auction generation output

Britain’s energy regulator, the Office for Gas and Electricity Markets (Ofgem), has proposed that the nation’s biggest utilities auction up to a fifth of their electricity generation, as it tries to break their control over the market.
Ofgem’s review found competition was being ‘stifled’ by tariff complexity, poor supplier behaviour, and a lack of transparency, and the regulator said the influence of the ‘Big Six’ on the market had not diminished since its 2008 probe.
According to Reuters, Ofgem is proposing a licence condition requiring the big six to sell 10-20 per cent of their power generation into the market through a regular mandatory auction, which it believes will make it easier for new players to enter the retail market.
Britain’s big six utilities are Scottish and Southern Energy, British Gas (Centrica), Iberdrola’s Scottish Power, RWE npower, EDF Energy and E.ON UK.
The regulator said the big six raised prices in response to rising costs more quickly than they cut them when costs fell, and added it had called in an independent accounting firm to examine companies’ returns.
‘Consumers have told us that energy suppliers’ prices are too complicated … That is why we are planning to sweep away this complexity so suppliers’ prices are fully exposed to allow easy price comparisons,’ the regulator said in a statement.
‘The energy supply companies have eight weeks in which to engage constructively with Ofgem’s proposals,’ Ofgem chairman Lord Mogg said. ‘If firms frustrate reforms, they risk ending up at the Competition Commission.’
Ofgem also announced an investigation into Scottish Power over a ‘significant’ difference between the company’s standard and direct debit tariffs and said it was exploring whether it needed to bring similar actions in the non domestic market.