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Ofgem has approved a request by RWE to be released from the market making obligation (MMO) introduced in 2014 to force incumbent suppliers to offer energy trades to smaller rivals.
The regulator said the sale of the company’s stake in Innogy has removed the rationale for the obligation, which originally applied all of the big six.
The MMO requires obligated companies to regularly post offers on trading platforms to buy or sell power over a variety of timescales, whilst also limiting the spreads between the two. It was designed improve the liquidity of the wholesale market and enhance access for other suppliers.
In its request to Ofgem in September, RWE said the obligation has become unnecessary after control over its former retail arm, Npower, was transferred to Eon as part of its acquisition of a majority stake in Innogy.
Ofgem agreed, noting that obligated parties should have a “substantial presence” in both the generation and domestic retail markets. It said RWE “can no longer be considered to be vertically integrated with a domestic supply business.”
The regulator has previously approved similar requests by Eon, Scottish Power and Centrica after they sold off many of their generation assets, meaning the obligation now only applies to two companies – SSE and EDF. Prompted by concerns that they may be left unfairly burdened by the obligation, Ofgem revealed plans earlier this month to end it entirely if RWE’s request was approved.
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