The UK’s largest energy suppliers are facing calls from the new energy secretary Amber Rudd to justify whether or not their prices are currently reflecting their companies’ costs.
Following the general election, which removed any possibility of a government induced price freeze, suppliers have been facing growing pressure to cut their rates more closely in line with wholesale costs. The BBC reported that Ms. Rudd said, “In light of the greater regulatory stability we are providing and continued stability in wholesale gas prices, I believe that energy suppliers should be seeking to regain the trust of consumers by reflecting this in their pricing decisions,”
Ofgem have added their voice to the debate, suggesting that suppliers could be in line to increase their profit per customer to £118 this year, and that wholesale gas and electricity costs were £80 lower than their estimated level last year.
Ms. Rudds’ letter echoes comments energyhelpline made following the general election. Director Mark Todd said, “A number of energy suppliers, such as npower, said that the only thing that was holding them back from a price drop was the threat of a Labour price freeze. With wholesale prices well down and supplier profits up 9% a year according to OFGEM, suppliers have clearly been hoarding savings and putting profits before their customers. Today, there is no excuse not to pass on wholesale price cut savings to customers.
“Wholesale gas prices have dropped 30% in the last 3 years but domestic gas prices are up 6% on average. Wholesale electricity has dropped 13% in the last 2 years but domestic electricity price is up 5.3%. These statistics should mean significant price cuts of 5% or more are possible.
“The market could now see environmental taxes reduced – David Cameron famously talked about getting rid of the ‘green crap’ – and Ed Davey, the Energy Secretary and the Lib Dems are now gone from Government.
“If we don’t see price cuts customers should switch supplier, as the energy companies’ excuses ran out today.”