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Ofgem has urged the big six to explain to customers what impact falling wholesale costs will have on their energy prices.
The regulator raised the pressure on major energy suppliers to justify not cutting retail prices, in a letter sent on Tuesday.
Gas and electricity wholesale prices for next day delivery are at four-year lows, Ofgem said, driven down by low demand on mild weather last winter.
The gas price is 38 per cent lower than this time last year and electricity 23 per cent lower. Forward prices for next winter are also down 16 per cent and 9 per cent respectively.
Dermot Nolan, chief executive of Ofgem, encouraged customers who were unhappy with energy companies’ explanations to “vote with their feet” and try independent suppliers.
He said: “The big six suppliers tell us that they think the market is competitive, but our research shows that consumer trust is low. Therefore if suppliers are going to start rebuilding that relationship they need to take the initiative and explain clearly what impact falling wholesale energy costs will have on their pricing policies.”
Nolan’s intervention followed a call, published in the Times, from price comparison site Uswitch on the big six to cut prices.
Analysts from Citi said suppliers were unlikely to make any decision on tariffs until the Autumn, however, as they recover from weak financial results.
Shadow energy secretary Caroline Flint MP said: “Yet again it looks like energy companies are up to their old tricks while David Cameron does nothing to stop them. When wholesale prices go up, consumers’ bills rise, but when wholesale costs come down consumers never see the benefit. Last month Labour revealed that the energy companies had failed to pass on the full savings from the Government’s changes to green levies to millions of their customers too.
“There is no excuse for energy companies failing to pass on these savings. That’s why Labour would implement a price freeze until 2017, which would prevent energy companies from increasing their prices anymore, but not stop them from cutting their prices. Labour will also give the regulator the power to force companies to cut their prices when wholesale costs fall, if they don’t do it first.”
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