EU clamp down on UK energy market

The UK has been named in a Europe-wide competition crackdown on an "ill-functioning" energy market.

The UK has been named in a Europe-wide competition crackdown on an "ill-functioning" energy market.

The European Commission has sent formal notices of legal action to 25 of 27 member states for breaching rules on consumer protection, transparency and pricing.

"In this time of economic and financial crisis, it is simply unacceptable that European consumers and companies suffer the burden of an ill-functioning energy market," energy commissioner Andris Piebalgs said.

The move came as a row simmered over claims by energy watchdog Consumer Focus that households were being overcharged by almost £1.7bn because suppliers are not passing on lower wholesale prices.

But regulator Ofgem said the research was "misleading" and the Energy Retail Association (ERA) - which represents energy suppliers - also cast doubts over it.

The European Commission is concerned there is not enough openness from operators of gas and electricity transmission networks on capacity available - hindering new entrants to the market and eventually leading to higher prices for consumers.

It wants the UK transmission system operator - National Grid - to co-ordinate more closely with France and Ireland over capacity on the network. National Grid operates gas and electricity transmission networks for the whole of Britain.

Piebalgs added: "The Commission is determined to take all necessary action to ensure that European consumers can benefit from real choice, better prices, and enhanced security of supply that only an open and competitive market can provide."

The Commission is worried over an apparent lack of enforcement of its regulations among member states and has also criticised five other countries for maintaining regulated prices in defiance of the market.

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