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CMA Submission – Independent Generators

CMAIn the latest in our series analysing the responses of key players to the CMA investigation into the UK energy market we focus on the independent generators.

Firstly Good Energy, the green focused energy supplier and generator has accused both Ofgem and the current vertically integrated structure of the dominant market players (the CMAs second Theory of Harm) as the root cause of the market issues.

Good Energy Chief Executive, Juliet Davenport OBE said:

“The [UK energy] market is currently tilted in favour of the big suppliers. The over regulation of the market and constant policy changes make it harder for challenger businesses like Good Energy to compete. Choice driven by competition is essential to improve the service customers get.”

However such concerns are not confined to small scale generation and supply businesses like Good Energy as Intergen, the Independent power generator has claimed that energy costs will inevitably rise if the dominance of the Big 6 energy companies is allowed to continue.

Intergen, which operates three large gas power stations in the UK, said that power station developers were unable to finance new projects because they could not find buyers for the electricity they generate.

This, according to Intergen, is because the Big 6 suppliers are largely self sufficient via their own sources of generation preventing the need for them to trade with independent generators in the open market.

As a result Intergen claim that independent electricity generators can no longer confidently enter into costly plant development safe in the knowledge that they will be able to trade their end product.

Intergen said:

“We strongly believe that the current market structure and concentration in the generation and supply sectors inhibit new entry and place non-integrated suppliers and generators at a competitive disadvantage.”

Intergen’s claims were backed by ESB, the Irish utility, which operates a further four gas power stations in Britain.

ESB said that the wholesale electricity market was an uncompetitive one that placed independent generators at a significant disadvantage. Indeed ESB pointed to the irony that is was the independent generators rather than the vertically integrated Big 6 that relied on the wholesale market to sell the electricity they generated.

In conclusion then whilst Good Energy’s arguments fell a little short of convincing (given their intentionally niche product offering), the thoughts of Intergen and ESB carry significantly more credibility and weight not least in highlighting the apparent folly of the CMAs failure to consider the impact of the wholesale gas market on the problems of economic electricity generation.

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