Ofgem, the energy industry watchdog, is considering ways of cutting red tape to increase competition among gas and electricity suppliers.

Currently, power companies must sign a licence with 170 pages of conditions dating back to privatisation more than 15 years ago.

The regulator believes that the licence is too long and complex. Failure to meet the conditions could leave companies facing a fine of up to 10% of their turnover.

Ofgem said it was launching a review of the issue. "This review is consistent with the principles of better regulation in seeking to cut unnecessary complexity. There are 170 pages of licence conditions, which may act as a barrier to companies entering the gas and electricity markets," said Steve Smith, Ofgem's managing director for markets.

He stressed that Ofgem would ensure any changes did not undermine the regulator's role in protecting customers' interests, particularly those of "vulnerable" customers.

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