LONDON, July 2 (Reuters) - UK utility Centrica intends to sell at least 30 percent of its day-ahead electricity generation on the openly traded N2EX exchange, it said on Monday.
The move comes after rival suppliers E.ON and Scottish and Southern Energy (SSE) announced plans to auction off day-ahead electricity production on the open market after UK regulator Ofgem pledged to break the “stranglehold” of the country’s six dominant energy companies.
“This new initiative will bolster the N2EX exchange and strengthen the industry’s drive to increase liquidity and improve market transparency,” Centrica said in a statement.
Britain’s big six energy suppliers - EDF, Centrica , SSE, EON, RWE and Scottish Power - were lambasted for steep energy bill hikes in 2011 as Ofgem pressed for more competition in the industry.
Ofgem proposed to force the largest producers to auction off up to 20 percent of the electricity they generate to encourage the entry of independent suppliers and boost competition.
But while utilities have opened access to their generating assets on a day-ahead basis, independent suppliers remain largely locked out of the more valuable forward markets, industry analysts and traders have said.
Centrica said day-ahead auctions facilitate short-term trading for all market participants and help to integrate Europe’s power grids.
The N2EX power exchange, owned by NASDAQ OMX Commodities, was launched in early 2010 as a platform to offer day-ahead electricity auctions to the British power market.
It has 34 trading members including large power producers such as EDF Energy and Centrica, trading houses and banks like Barclays and Deutsche Bank.