By Marcus Leach

Smaller gas and electricity suppliers will benefit from a cut in red tape in time for next year, Energy Minister Charles Hendry announced on Monday.

Firms with 250,000 customers or fewer will not have to take part in two government programmes - the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP).

This follows a consultation which originally proposed a threshold of 100,000 customers.

Previously suppliers with as few as 50,000 customers were obliged to participate. Participating in these schemes placed a disproportionate burden on small suppliers, acting as a barrier to market entry and reducing incentives to grow.

“Currently, over 99% 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," Charles Hendry said.

"Increased competition can help bring down prices and encourage innovation, benefitting energy consumers.

“It’s vital that we improve energy efficiency without placing disproportionate costs on small suppliers. We have listened to small suppliers, studied the evidence and gone further than our initial proposals, to give competition a bigger boost.”

CERT and CESP will run until the end of 2012. The Department of Energy and Climate Change is considering how to design future schemes to minimise burdens for all suppliers.

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