Ofgem to tackle energy markets' lack of transparency and competition

Energy regulator Ofgem reviewed the energy markets ordering providers to simplify tariffs systems an

Ofgem thoroughly reviewed the British energy market as a consequence of mounting complaints that providers were making excess profits. It argued firms had "failed to play it straight with their customers", pointing out that their' average net profit margin per costumer rose by 38% between September and November 2010, going from £65 to £90.

It said the six main energy suppliers in the country - the "big six", which include British Gas, E on Energy, EDF Energy, Npower, Scottish and Souther Energy and Scottish Power - would be forced to auction a fifth of their electricity, thus leaving room for new companies.

The regulator also estimated that costumers were "bamboozled" by an increasingly complex set of tariffs systems, whose number had increased from 180 to over 300 hundred since 2008. It has ordered companies to set up a simpler tariff system, thus allowing customers to compare prices more easily.

Ofgem particularly emphasised on its will to ban automatic renewals of fixed contracts. It insisted that costumers should instead be defaulted back to the standard tariff unless they explicitly ask for a particular deal.

Alistair Buchanan, Ofgem chief executive, metionned the need for these companies to be transparent vis-a -vis their clients: "Consumers must have that energy companies are playing fair at at time when they are being asked to foot the £200 bill for the investment Britain needs to secure sustainable energy supplies", he argued.

Firms who do not comply with the new regulations will be investigated, adding to the various ongoing inquiries.

Currently, Ofgem is conducting an inquiry on the poor handling of costumer complaints by British Gas, EDF Energy and Npower. Meanwhile, the regulator also announced it will investigate Scottish Power's pricing regime.