Energy suppliers ‘overcharged’ customers by not cutting bills sooner, says Which?

Energy suppliers have overcharged consumers by up to £2.9 billion over the last year by not cutting bills further and sooner, a Which? report has said.

Which? executive director Richard Lloyd says the report places a “massive question mark” over how suppliers have been setting prices over the last two years.

He said: “While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they’ll deliver fair and affordable energy prices in the future.”

Which? calculates that the failure of energy retailers to align their prices with wholesale costs has cost consumers an equivalent of £145 per household on standard energy tariffs.

The report states: “The recent cuts in big six standard gas tariffs of up to 5.1 per cent should have been greater, in the region of 8.8per cent to 10.3 per cent.”

SSE has hit back at the report, claiming it “ignores many fundamental factors” behind movements in household bills and suppliers’ costs.

Dr Richard Westoby, SSE director of retail economics, said: “Our audited accounts show that in reality SSE made £48 profit per customer in 2013/14, far less than this report implies.”

Energy UK chief executive Lawrence Slade agrees. He argued that the Which? calculations are based on “hedging assumptions for 2013 [which] are different from Ofgem’s report based on the companies’ actual accounts.”

He said: “Costs are coming down but, because energy companies buy ahead to fix prices and to plan with certainty, the gas and electricity we are using today has already been paid for.”