Ofgem proposes utilities competition regulation

22nd Feb 2012 15:00

Ofgem has put forward proposals for mandatory sales of 25% of the annual electicity generated by the six largest utility firms in a bid to improve competition. The UK power market watchdog has suggested that the 'big six' be obligated to sell key products for delivery ranging from three months to three years every month to enable smaller firms to more fairly deal in the contracts. The big six, namely SSE, Centrica, RWE, EON, Iberdrola and Electricite de France, together supply 99% of the UK's power and gas, making competition difficult for smaller firms. In an emailed statement, the regulator said: "Ofgem is proposing to introduce mandatory auctions to force the pace of change and increase transparency."By making sure that certain products are reliably and transparently traded, this intervention should significantly improve the availability of risk management tools and strengthen market signals, and by extension should help to facilitate more competitive generation and supply markets."The proposal won't inhibit utilities from increasing trade on their own accord, Ofgem added. The plans are now open to comment until May 8th, with a final decision expected later this year. The general consensus among analysts is a forecast of a 2% rise in the volume of traded power this year, as indicated by a Bloomberg survey conducted last month. NR