Part of the reforms will be reducing the market share of the big six - EDF, British Gas, Scottish Power, E.ON, npower and Scottish and Southern energy - by making them auction off up to 20 per cent of their sources to smaller providers.
The organisation's chairman, Lord Mogg, called the plans "a holistic package of changes", explaining that suppliers have eight weeks to comply or they will risk facing the Competition Commission.
Consumer Focus's chief executive Mike O'Connor welcomed the decision and described companies as being "on a very short leash". He added that the public's confidence in the sector is low compared with others.
Furthermore, prices will have to be simplified and practices become more transparent for the consumer, so that it makes it easy to compare energy bills.
Ofgem has set a deadline of June 1st for the industry to respond to its proposals.
Posted by Richard Eden
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