The Uk Energy Market

The United Kingdom (UK) has been in a position to allow business and domestic consumers to choose who supplies their gas and electricity. This has been created by a liberalised or deregulated market. The following gives you an explanation as to how this is possible.

In the late 1990's the energy market regulators and the UK government decided to stop the monopoly that British Gas and the regional electricity companies had in the UK. They "deregulated" the energy markets meaning other companies could supply gas and electricity to regions that were previously unavailable.

The gas market was the first to deregulate and new gas companies or electricity companies could start to supply gas to what were British Gas customers in the UK.

The electricity market was next to open up. There were originally 14 supply areas in the UK, with regional supply companies. Each of these companies could only supply the customers in their respective regions. These regions can be seen here.

The electricity market opened in two stages. First companies were allowed to offer products in other supply regions but the regional supplier had to have their pricing agreed by Ofgem before they could change prices.

This was to make sure that companies coming in to new areas provided cheaper products than those of the regional supplier.

After a few years of this the restrictions were lifted to allow regional supply companies to compete in a fully deregulated market.