One of the big six energy companies broke ranks with rivals today by offering its electricity for sale to any household supplier.

The plan by Scottish and Southern Energy (SSE) to auction all of its power on the open market is expected to boost transparency in the energy market and remove a barrier to entry for new suppliers by allowing them to buy electricity to sell to consumers.

Key Points

  • SSE to auction all its electricity on the open market
  • Aims to boost transparency in the market
  • Hopes to also remove a barrier to entry for new suppliers

The big six companies currently sell most of the electricity they generate directly to consumers, with only a small amount traded on the wholesale market.

Amid concerns that household bills are higher because of the lack of competition in the supply market, energy regulator Ofgem has proposed that utilities must auction 20% of their electricity by 2013.

However, SSE says it will go further than this by auctioning 100% of its power on the UK's day-ahead wholesale market by early next year, and will buy all the electricity its customers need from the same source.

It will phase in auctioning from this Friday and aims to auction 25% of its power by the end of November.

SSE says it expects "one or two" of its competitors from the big six to follow suit by Christmas.

Improving transparency

Alistair Phillips-Davies, SSE's generation and supply director, says: "If other energy companies adopt a similar approach, this commitment could lead to a transformation in the wholesale electricity market in Britain."

Last month, Labour leader Ed Miliband used his party conference speech to call for a break-up of the "rigged market" in energy which delivers massive profits to a few giant companies and swollen bills to consumers.

Miliband says: "I welcome this step taken by Scottish and Southern Energy.

"Other energy companies should now follow suit to bring a fairer deal for consumers and end the rigged market.

"It is just one example of how we need to rewrite the rules of how our economy works to tackle vested interests and get a new bargain for people."

Adam Scorer, director of external affairs at Consumer Focus says: "More open trading will help to increase transparency over the prices suppliers pay and increase competitive pressure in the market, which will help to keep pricing fair for consumers."