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Last Updated: Monday, 16 April 2007, 15:46 GMT 16:46 UK
Call for action on energy prices
By Samantha Washington
BBC Radio 4's Money Box

Gas ring
Millions of people have not seen any reduction in their bills
The energy regulator is resisting calls to investigate gas companies for not passing on price cuts to customers.

The wholesale cost of gas supplies to energy companies has been cut in half since last June.

But with only two of the six energy companies having cut prices, millions of people have yet to see a penny off their bills.

And consumer bodies are saying the regulator is going back on its word to take tough action.

A combination of increased supply and lower oil prices has resulted in a 50% fall in the wholesale price of gas.

The six energy companies have been enjoying this reduction since last summer, but consumer body Energywatch said millions of consumers have been left in the cold.

"It's indicative of a sleepy industry where they don't feel they have to respond," said Allan Asher, chief executive of Energywatch.

Tough talk

British Gas and Scottish and Southern Energy are the two firms which have reduced their prices.

But Energywatch said the 17% British Gas cuts are much less than the fall in wholesale prices and less than the drastic 95% increases brought in over the last few years.

Two other companies, Npower and Powergen have announced reductions which are yet to come through.

And EDF and Scottish Power have not made or announced any cuts at all.

We have hard Competition Act powers. We can penalise them 10% of their global revenues
Alistair Buchanan, Ofgem (September 2006)

Back in September, when wholesale prices had been falling for a few months, the regulator, Ofgem, said it would take tough action on any gas company behaving uncompetitively.

Speaking to BBC Radio 4's Money Box, Alistair Buchanan, chief executive of Ofgem said: "Should Ofgem feel that companies are keeping jam on their fingers, we will instigate a thorough review.

"We have hard Competition Act powers... We can penalise them 10% of their global revenues."

Consumer watchdog Energywatch said it has been months since the regulator made threats to intervene and that it is time to take action.

"Ofgem seems to be taking an alarmingly hands-off approach," said Allen Asher.

"One would expect a regulator who's really concerned about consumer welfare to be in there."

In a statement, the regulator has said it sees no current reason for intervention and that the "energy market is highly competitive".

It added that if wholesale prices continue to fall, suppliers would be expected to make further price cuts.

BBC Radio 4's Money Box was broadcast on Saturday, 14 April 2007 at 1204 BST.

The programme was repeated on Sunday, 15 April 2007 at 2102 BST.

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