Thursday, 5 February 2015

Energy bills could be much lower

Recent cuts in consumer energy bills could have been much bigger and made much earlier, research from consumer body Which? has found.

It said energy suppliers had failed to keep standard variable energy tariffs in line with falling wholesale prices over the past two years.

As a result, households on standard energy tariffs were £145 worse off last year, or a total of £2.9bn, it said.

Industry body Energy UK said firms had cut prices as soon as they could.

Which? executive director Richard Lloyd said: "Our analysis places a massive question mark over how suppliers have been setting prices over the last two years.

"They now need to explain to their customers why bills don't fall further in response to dropping wholesale prices."

Currently the big six energy firms - SSE, Scottish Power, Centrica, RWE Npower, E.On and EDF Energy - together account for about 95% of the UK's energy supply market.

Which? said the presence in the market of a range of smaller suppliers offering lower prices did not appear to be exerting sufficient competitive pressure on these major suppliers to cut energy bills faster and further.

"In a genuinely competitive market suppliers would be forced to be more efficient and to keep their prices in check as wholesale costs fall," it said.

However, Energy UK chief executive Lawrence Slade told the BBC that because suppliers bought wholesale gas on the futures market, to try to hedge - or protect - themselves - against future price rises, they didn't immediately benefit from falls in wholesale prices.

"As prices are falling, as companies can actually afford to pass those savings on, they are doing so.

found on the bbc

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