Ofgem warns energy suppliers over wholesale gas prices

Monday, 07 December 2009 11:25

The UK energy watchdog Ofgem has warned energy suppliers that customers must benefit from a fall in wholesale gas prices.

The regulator said that if wholesale prices continued to fall bills must come down in the New Year to stop customers paying over the odds.

It said companies should not "use investment as a shameful excuse to overcharge consumers".

Ofgem said customers could also save around £200 a year by switching suppliers as a result of new companies emerging to create more competition in the marketplace.

It announced a further investigation into retail prices in the New Year, adding it would not "shy away from proposing radical reform to protect the interests of consumers."

Ofgem said that at the moment firms were still recovering from three or four years of losses.

But profit margins in dual fuel bills are at a five year high and may rise further.

So far, the cost to the customer has been broadly neutral but if wholesale gas prices continue to fall as predicted, then companies will need to reflect that in their bills.

Meanwhile, Ofgem said average electricity bills would be allowed to increase by £4.30 a year for five years to pay for network upgrades.

The 14 networks that make up the UK supply were built in the 1950s and 1960s and are in need of investment.

Ofgem chief executive Alistair Buchanan said the proposals were "tough on inefficiency and poor service but fair in allowing the companies to invest".

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