Ofgem is stepping up its investigation into energy company pricing, by hiring forensic accountants to scrutinise reported retail profits.
Auditing firm BDO has been tasked with looking at trading profits and wholesale prices to examine whether recent price rises are justified.
Richard Lloyd, executive director of Which?, said: ‘The ‘big six’ energy companies have failed to prove that price increases are fair, so we support Ofgem’s efforts to scrutinise price hikes across the board.
‘Only then will we know if customers are really getting a fair deal.’
Wholesale energy cost
In March this year, Ofgem said that it was concerned about the pricing behaviours of the ‘big six’ energy companies.
The regulator said that it had reason to believe that when wholesale costs fluctuated, the companies were raising prices more quickly than they would reduce them.
The move is the next step in Ofgem’s retail market review, which it hopes will improve transparency across the energy industry.
Price rises kick in
News of the investigation will be welcomed by consumers, many of whom will struggle to pay bills as the first round of energy price rises hits.
Five out of the big six energy suppliers announced price rises this summer, and the increases are just starting to take effect.
For the other energy companies, price rises will begin in September and October:
- Eon: up 18.1% for gas and 11.4% for electricity, from 13 September
- Scottish and Southern Energy (SSE): up 18% for gas and 11% for electricity, from 14 September
- Npower: up 15.7% for gas and 7.2% for electricity, from 1 October
Energy price honesty
We’re calling for energy companies to make energy tariffs clearer and more transparent. Even if wholesale prices do increase, with simple tariffs, customers can more easily compare prices and switch.
We’re also asking the government to help increase competition in the energy market – by clearing the way for new suppliers, this could potentially help drive improvements in services and lower prices.
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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