Smaller energy suppliers could spark price war

British homeowners have been hit hard by rapid increases in the cost of living and price rises from energy suppliers have been soaring. But there could be some relief on the way.

Energy suppliers price war
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Thanks to the Government scrapping expensive regulations for smaller suppliers, consumers could see a price war beginning.

Energy firms with fewer than 250,000 customers will no longer have to follow the Carbon Emissions Reduction Target rules nor those associated with the Community Energy Saving Programme.

This means that smaller companies would no longer be forced to pass on the cost of these schemes to consumers and will therefore be free to undercut the 'Big Six' on price.

A recent report by watchdog Ofgem revealed that the Big Six hold a monopoly in the UK and ordered a fifth of their electricity generation to be sold to smaller firms.

But until now the cost of taking part in the aforementioned Government schemes "placed a disproportionate burden on small suppliers", said energy minister Charles Hendry.

With householders across the country already struggling to pay the bills, the lure of cheaper gas and electricity will prove all too tempting and this in turn may force the big companies into a price war.

If smaller companies do as expected and reduce their prices, industry experts predict the Big Six suppliers to follow suit.

Mr Hendry added: "Currently, over 99 per cent of people get their energy from just six big companies. Reducing red tape for smaller suppliers will help them grow and encourage new players into the market.

"It's vital that we improve energy efficiency without placing disproportionate costs on small suppliers."

It can only be good news for British consumers.

What do you think? Have the Big Six had a stranglehold on the market for too long? Leave a comment below...