Gas and electricity Updated:
Major energy firms have long been under scrutiny for failing to trade fairly, with a lack of competition meaning many consumers are faced with little choice when choosing supplier. However, thanks to new regulation from industry regulator Ofgem, this could be set to change – as of March 31st, the largest suppliers and generators will need to trade fairly with smaller, independent suppliers in the market, or face hefty fines if they fail to do so.
The new rules will include the requirement of major suppliers and generators to publish their wholesale energy prices two years in advance, and must ensure they sell that energy to smaller suppliers at market rate – and they can't refuse or delay reasonable requests from independent suppliers to buy it. Their annual statements will need to be more transparent and credit arrangements with smaller suppliers must be clear and easy to understand, and big firms will need to provide additional details of their trading activities which can be further reviewed by regulators.
The new measures have been designed to improve the transparency of firms' costs and make it easier for smaller suppliers to enter the market, and ideally help them stand a chance at competing with the big six. The changes will mean smaller companies will find it easier to buy energy and re-sell it to their customers, and it'll be more economical for them too – potentially meaning that, at some point, those savings could be passed onto consumers and there will hopefully be more competitive tariffs available.
Secretary of state for energy and climate change Edward Davey said: "This is a significant and welcome toughening up of competition in electricity markets. 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.
"We've been working to make energy markets work better so that consumers get a better deal, and getting a clearer picture of how energy companies are spending their customers' money is an absolutely vital step. Changing the rules for how energy is sold to suppliers is a big step forward in creating a fairer, more competitive energy market in the UK
It could be welcome news for energy customers who are longing for more choice when choosing tariffs, particularly in the wake of so many price rises. At present the major firms dominate the market, but increased transparency and competitiveness means smaller firms could stand a chance at competing – and it could even result in increased rivalry over prices, ideally driving them down. In the meantime it's important to choose your tariff wisely, so make sure to compare the current options available to see if you can find a package that meets your budget – and saves you money.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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