Ofgem turns up the heat on energy firms

The regulator is trying to look tough, announcing it'll fine the 'Big Six' if they don't play fair with small suppliers.

by Rachel Savage
Last Updated: 28 Feb 2014

Ofgem is attempting to shine a light on the ‘Big Six’ energy firms’ finances and make it easier for small companies to compete, the latest attempt by the regulator to flex its muscles against the current bad boys of British business.

The ‘Big Six’ - Centrica-owned British Gas, EDF Energy, Eon, Npower, Scottish Power and SSE - have been warned they have to trade wholesale energy with small suppliers ‘fairly’ or face fines, including publishing their wholesale prices two years in advance (likely requiring some pretty hefty hedging), fully audit the accounts they give to Ofgem and publish annual statements sooner after their yearly results.

The regulator is also going to make the ‘Big Six’ include Return on Capital Employed in their statements, to reflect the investment they need to make in power generation. It might stop the merry-go-round of politicians bleating about supposedly high margins and energy firms moaning in response that that isn’t the whole story, as they have to invest to stop the lights going out. The idea is, of course, that if politicians' and consumers' complaints are accurate, firms will have nowhere to hide...

In case we were in any doubt about its intentions, Ofgem, which is due to publish a review of competition in the energy market at the end of March, titled its press release, ‘Ofgem tears down barriers to competition to bear down as hard as possible on energy prices’. Coming out swinging then.

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