Further developments for competition in the energy sector
Following Ofgem’s announcement in June that it had decided to refer for investigation the market for the supply and acquisition of electricity and gas covering supply to domestic and small business customers, Ofgem and the Department of Energy & Climate Change (DECC) have jointly published an action plan of measures to encourage the growth of independent energy suppliers.
The government and Ofgem have been working with independent suppliers to identify how to encourage new entrants to the market and to improve the environment in which independent suppliers operate, with a focus on three key areas:
1. Rules and obligations with which suppliers are required to comply: the principal concern here is the current ‘customer number threshold’ for exemptions for small suppliers from complying with certain government programmes. The customer number threshold removes potential barriers to entry for small suppliers (compliance with certain regulatory requirements) but it may disincentivise suppliers from growing beyond the threshold…
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