Following the coldest December on record – resulting in huge gas and electricity bills for many – the price watchdog has publicly called into question the companies’ mounting profits.
Last November, regulator Ofgem announced an inquiry into the ‘Big Six’ suppliers – British Gas, Eon, EDF, Npower, Scottish Power and Scottish and Southern Energy – following a 37% rise in net margins. After two more price hikes, the margins have now increased by 49% to make up £97 per year of the average customer bill.
Ofgem’s chief executive, Alistair Buchanan, revealed the mounting profits yesterday. At the Energy and Climate Change Select Committee, he said: ‘We need to make sure that energy companies are not abusing their position.
‘I think the consumer has become slightly jaded and cynical perhaps because of some of the behaviour we have seen from the companies.’
If you’d like information on tariffs from smaller suppliers such as Ebico, the UK’s only not-for-profit energy supplier, or Ovo Energy, which pays 3% interest on credit balances, go to the Which? Switch site for impartial advice and a comparison with the Big Six.
Big Six price hikes
All but one of the Big Six providers (which supply 98% of British homes) have recently increased their bills – hitting consumers over the winter months when 40% of the total annual energy is consumed. Have a look at our energy supplier customer satisfaction survey to see how these major players compare when rated on issues such as value for money and bill clarity.
Which? energy expert Fiona Cochrane said: ‘Ofgem really needs to step up to the mark now, offer decisive solutions and fundamentally improve the energy market so it finally offers real choice for consumers.’
In November, customers saw dual fuel bill rises from Scottish Power (£52) and SSE (£67); December brought an £80 hike from British Gas and this month, Npower and Eon have lifted prices by £65 and £62 respectively in the average bill.
Only EDF has promised a price freeze until March – the same month that will conclude Ofgem’s inquiry into the energy giants’ soaring profits.
The ongoing investigation was prompted by the rising profits of the energy giants, and is set to gain momentum as margins increase again.
Mr Buchanan also revealed that another investigation was underway, based on claims that Big Six salesmen had posed as representatives from the National Grid and even from Ofgem.
He confirmed that the Big Six may be referred to the Competition Commission – or that Ofgem may seek greater powers to enable it to crack down on the suppliers – as a result of the investigation’s conclusions in March. Ofgem said: ‘If we find evidence that the market is failing consumers, we won’t hesitate to act.’
Saving money on energy bills
About 24.6 million consumers have seen their bills increase over the last two months, with the average bill payer forking out an extra £65 on their dual fuel bill as a result. But there are ways to keep your bills down if you’re worried about costs and aren’t in a position to switch supplier.
Have a look at our guide on how to use less electricity to see how you could save £250 a year by putting energy saving measures in place.
Lower your gas and electricity bills
You can compare energy prices and switch to a new gas and electricity supplier on Which? Switch. People who switched with us between 1 October and 31 December 2013 are predicted to save an average of £234 a year on their bills.
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