The measures set out by the regulator on Wednesday are intended to make it easier for small players to compete, by improving access to power products.
They include a “market maker obligation” on the big six energy suppliers, under which they must post bid and offer prices for power two years in advance.
Ramsay Dunning of Co-operative Energy said: “In forcing Britain’s biggest energy generators to publish the prices at which they are willing buy and sell electricity for two years ahead, Ofgem can bring to an end the unfair practices often used to effectively block small suppliers out of the wholesale market.”
Independent supplier to businesses and public sector organisations SmartestEnergy agreed it would create greater visibility on pricing and make it easier to buy power. Colin Prestwich, head of regulation, said the proposals marked “a significant step forward”.
The proposals place requirements on the big six and the two largest generation companies, Drax Power and GDF Suez, to trade fairly with independent suppliers.
Good Energy chief executive Juliet Davenport said that would create new opportunities for power trading. “In the long run, those opportunities should help us in our work to deliver the kind of innovative, price-competitive energy tariffs that our customers have come to expect from us,” she added.
Davenport also welcomed moves to make the eight biggest generators take a more flexible approach to collateral requirements for smaller suppliers buying power.
Not all were convinced by Ofgem’s claim the proposals would “break the stranglehold of the Big Six”, however.
Darren Braham, chief financial officer at First Utility, said Ofgem must continue to consult with industry to develop the proposals. He said: “Ofgem’s proposals are a positive move and there is no doubt that independent suppliers will be better off as a result, but the concern is that they will be complicated to design, implement and manage and won’t completely solve the problem.”
He maintained that a self-supply restriction, which would force vertically integrated companies to sell all their power on the open market, was the most desirable long-term option.