Gas Suppliers Warned On Bills

A UK energy regulator has warned gas suppliers that prices charged to households must come down if the price of wholesale gas continues to fall.

The regulator, Ofgem, said companies must not "use investment as a shameful excuse to overcharge consumers" and bills must come down in the New Year to avoid the customer losing out.

Alistair Buchanan, Chief Executive of Ofgem, said a new investigation into retail prices will be launched in the New Year and Ofgem "will not shy away from proposing radical reform to protect the interests of consumers."

Ofgem also told customers that they can save around £200 a year by switching suppliers and that's down to new players in the industry providing competition.

According to regulator at the moment firms are still recovering from three or four years of losses.

However it added that profit margins in dual fuel bills are at a five year high and they 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.

But the energy firms seem unlikely to cut their prices.

Today they stepped up the PR offensive, publishing their own analysis which concluded that "energy suppliers are making little or no profit from providing energy to people at home."

"The reality is that companies may be making some modest profit this year after around 4 years of making either none at all, or a loss," said Energy UK - a new communications unit representing the leading gas and electricity suppliers.

The statement added that energy itself only accounts for about half of customer bills - with the rest including things like the cost of renewable energy, as well as the cost of getting the energy from its source into homes.

(LB/BMcc)