British Queen celebrates


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The "big six" power suppliers should sell off up to a fifth of their electricity output in a move to "break the stranglehold" they have over the market, the energy watchdog has said.

The major suppliers "failed to play it straight" with consumers, according to regulator Ofgem, and have eight weeks to comply with a series of radical proposals to overhaul the industry or face a referral to the Competition Commission.

The reforms include reducing the number of tariffs suppliers offer to avoid confusion over price and improving transparency by appointing an independent accounting firm to investigate the suppliers' books.

An additional investigation into Scottish Power's standard credit prices has also been launched.

Ofgem launched its review in November after it emerged that price hikes had seen suppliers' profit margins soar by 38%.


The watchdog said that for the first time, it had evidence the big six - British Gas, E.ON Energy, EDF Energy, Scottish Power, npower and Scottish & Southern Energy - had pushed up prices in response to rising costs more quickly than they reduced them when costs fell.

The regulator found average industry margins on a standard dual fuel tariff rose to £90 in November, from £65 in September.

It said it would look into the "facts behind the numbers" as companies claimed rising prices in the wholesale market - where suppliers buy their energy - left them with no choice but to hike bills.

The review found that competition was being "stifled" by complex tariffs, poor supplier behaviour and a lack of transparency.

Ofgem said forcing the big six to sell off 20% of their electricity output would help smaller firms enter the retail market.


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