Britain's six dominant utilities should auction off a quarter of their power supplies to encourage the entry of independent suppliers, UK energy regulator Ofgem said on Wednesday, raising a target of 20 percent announced a year ago.

The revised figure equates to roughly half of the UK's household electricity use.

Ofgem aims to open up the forward electricity market controlled by the Big Six utilities in a bid to encourage competition and lower retail energy prices.

Its proposals are designed to allow new entrants to guarantee power supplies months and years in advance and to hedge risks.

Consumers will get the best deals when suppliers face tough competition and that is what both government and regulator are working to achieve, Energy and Climate Change Secretary Edward Davey.

Ofgem wants the likes of SSE, Scottish Power, RWE, E.ON, EDF and Centrica to make available 25 percent of their electricity supply in a mix of prompt and long-term power products to new entrants that currently lack generation capacity.

Ofgem wants frequent trading in key forward power products as well as reasonable and transparent terms of access to independent suppliers, it said.

Consultation on the proposals will end this summer, at which point Ofgem expects to publish its final reforms. Any resultant regulation would not come into force before the end of the year.

Two of Britain's top energy suppliers have already stepped up efforts to trade more short-term electricity generation on the open market, which led to a five-fold increase in traded volumes between September and December last year, Ofgem said.

SSE was the first producer to pledge trading all of its supply on the day-ahead electricity market, while rival E.ON said it would offer more than 30 percent of its production on the spot power exchange.

Ofgem's proposal to boost liquidity in long-term power trading is part of the regulator's wider retail market reforms which include asking suppliers for simpler tariffs and improving conduct standards such as preventing aggressive doorstep selling.

The regulator made its first proposals in March 2011.

(Reporting by Oleg Vukmanovic and Karolin Schaps; editing by Jason Neely)