Secretary of State for Energy and Climate Change Chris Huhne

UK will strengthen energy regulator Ofgem

Energy supplier competition will be boosted by strengthening regulator Ofgem, energy minister Chris Huhne has said.

Energy companies will no longer be able to delay Ofgem rulings by up to a year by forcing the independent regulator to seek a second opinion from the Competition Commission.

The regulator will be able to proceed directly with its decisions, with companies having a right of appeal, according to advance extracts of a speech by Huhne to his Liberal Democrat Party at its annual conference.

"We are determined to get tough with the big six energy companies to ensure that the consumer gets the best possible deal," Huhne said.

Britain's six largest utilities are German groups E.ON and RWE , British companies Centrica and Scottish and Southern Energy, French operator EDF and Spanish firm Iberdrola .

All have raised prices in recent months, putting pressure on the government to ease the pain for consumers paying 20 per cent more, on average, for energy than a year ago, according to comparison website USwitch.

Huhne said Ofgem should investigate whether small companies were being kept out of the market by the larger firms' pricing practices, with some making "cut-throat" offers to new customers while keeping existing consumers on higher tariffs.

"That looks to me like predatory pricing. It must and will stop," he said.

The government will also consider giving Ofgem the power to force energy companies to reimburse consumers directly or pay to funds that benefit customers when they breach licence terms.

Fines currently go direct to government coffers for general spending.

Customers will also be able to switch suppliers more quickly and officials will work on plans to allow organisations such as housing associations to switch hundreds of tenants at a time to cheaper energy companies, Huhne said.

E.ON UK chief executive Paul Golby said the government was attacking the wrong target at a time of rising world energy prices.

"Blaming energy companies in Britain for global energy costs is not productive. As just about all industry commentators have said, the age of low price energy is over."

Evolution equities analyst Lakis Athanasiou said while the moves would put pressure on profit margins, they would only have a "mild bearish impact" on Centrica, the dominant player and home to the British Gas brand.

"There is very little that encouraging switching will do to reduce residential tariffs, and increased switching may even drive up supply operating expenses, putting upward pressure on prices," Athanasiou said.

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