Warning shot over UK energy bills

Energy firms have come under pressure to cut prices

The energy regulator has told the big six UK household suppliers to come clean about the cost of bills this coming winter.

Ofgem's chief executive Alistair Buchanan said he expected the energy companies' prices to "respond" to falling wholesale costs.

Customers would be facing high bills during tough economic times, he warned.

The group which represents the energy companies said customers had been protected from high costs last year.

Letter

Mr Buchanan said that times were particularly difficult for those in fuel poverty, but that wholesale costs had fallen from last year's peak and were set to drop further.

The suppliers need no reminding of the importance of pricing to customers Garry Felgate, ERA

"In a strong competitive market, we would expect prices to respond to such falls," he said in a letter to the chief executives of the six energy providers.

"You will be familiar with these trends and also aware of some public dissatisfaction with suppliers' response so far to wholesale price reductions."

He called on the companies to account for their pricing policies to customers.

"I believe you owe it to consumers, ahead of the winter, to explain how cost changes, including falling wholesale costs, are likely to bear on future energy bills and I urge you to do this," he wrote.

Response

The "big six" energy providers are British Gas, E.On, EDF Energy, Scottish and Southern, Scottish Power and Npower.

Garry Felgate, chief executive of the Energy Retail Association (ERA), which represents the suppliers, said that companies understood that the regulator was doing its job by raising the issue, but that companies were operating in the most competitive energy market in the world.

"The suppliers need no reminding of the importance of pricing to customers," he said.

"We have seen energy prices falling for the vast majority of customers this year. Despite these falls the wholesale market still remains volatile and a challenge for energy suppliers coming up to the winter.

"Customers have been protected from the massive rises in wholesale prices last year, price rises that were not fully passed on at the time. This comes at a time when companies are investing billions of pounds in new generation capacity to ensure an essential, reliable and safe energy supply to their customers."

Consumer Focus, the official watchdog that speaks for consumers, said energy customers were already being overcharged and there was room for price cuts now while wholesale costs were lower.

"Energy firms must give their customers a fair deal and make these cuts before winter bills start to hit," said Robert Hammond, of Consumer Focus.