Energy Companies Overcharging Their Customers, Says Ofgem
January 15, 2016
Gas and electricity bills being paid by households throughout the UK are often higher than they ought to be, according to the government-backed body that regulates the industry.
The wholesale prices being paid by energy companies for gas and electricity have been falling in recent months but the resulting savings have not been passed on to consumers to Ofgem’s satisfaction.
Speaking to the BBC on the subject Dermot Nolan said energy bills should be lower than they are “for the vast majority of people”.
Nolan pointed out that the costs involved in buying energy wholesale account for roughly half of the charges presented to consumers but, despite the fact that wholesale costs have fallen by around a third since mid-2014, cuts to household energy bills have been minimal.
“We really should be seeing bigger retail cuts than we have seen so far,” he told the BBC.
The issue of potentially unfair retail energy pricing has been referred by Ofgem to the Competition and Markets Authority (CMA) for closer scrutiny.
For now though the energy regulator’s advice to bill payers is to investigate where they might be able to save money by switching their energy supplier or by switching to a more favourable tariff.
The CMA is expected to present its views on the state of competition in the retail energy market in the coming weeks with a variety of reforms likely to be recommended.
Mr Nolan from Ofgem told the BBC that his organisation could be open to the idea of establishing an especially cheap energy tariff for individuals and households that are particularly vulnerable to the potentially damaging impacts of high energy bills.
In the context of the same conversation, Richard Lloyd from the consumer group Which? insisted that there are not enough “competitive challenges” affecting retail energy companies and forcing them to reduce their prices to end users of their services.
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