Ofgem writes to energy firms over falling wholesale prices
Ofgem has called on the Big Six energy suppliers to explain to their customers what impact falling wholesale prices will have on bills, saying the cost of both gas and electricity has been dropping "significantly" in recent months.
British Gas as responded to comments about wholesale energy saying that "when our costs fall, our prices do too".
The wholesale cost of energy is now less than half the bill which partly explains why the wholesale price can fall, but overall prices don’t.
Most suppliers buy their energy in advance, up to three years in some cases, to ensure security of supply and smooth out price volatility.
When our costs fall, our prices do too.
In December, the government’s restructure of the energy efficiency scheme ECO, resulted in British Gas being the first supplier to introduce a £42 price cut for all our customers, including those on fixed deals - the only supplier to do so.
The Big Six energy companies need to rebuild consumer trust by explaining their pricing policies to customers, the energy regulator Ofgem has said.
Dermot Nolan, the regulator's chief executive officer said: "Given the need to re-build consumer trust in the market it is important that suppliers explain to their customers these changes in the wholesale market and what impact they will have on their pricing policies."
Energy regulator Ofgem has proposed that the Big Six energy firms should be investigated by the Competition and Markets Authority.
In an open letter to Britain's main energy suppliers, the regulator's chief executive officer Dermot Nolan said they were concerned that companies were "not passing on savings to customers".
He said: "A concern that savings were not being passed on to customers was one of the reasons why we have proposed a referral of the energy market to the Competition and Markets Authority for investigation."
The energy watchdog Ofgem has said that the Big Six should pass on savings from wholesale prices to customers as soon as it is possible.
In an open letter, the regulator's chief executive officer, Dermot Nolan, said: "In a competitive market, I would expect the threat of losing market share to encourage suppliers to pass on sustained reductions in wholesale costs as savings to consumers as soon as possible.
"If that is not happening, it could be seen as further evidence that competition is not working for consumers as well as it should be."
Energy regulator Ofgem has called on the Big Six energy suppliers to explain to their customers what impact falling wholesale prices will have on bills, saying the cost of both gas and electricity has been dropping "significantly" in recent months.