Britain’s Big Six gas and electricity firms are facing fresh pressure to cut tariffs after regulator Ofgem said tumbling wholesale energy prices meant they could afford to lower household bills.
Latest figures from the regulator suggest the power giants are on course to make £102 profit per household over the coming year compared with £48 in 2013, assuming normal weather and no change in tariffs.
The regulator wrote to the big companies – British Gas, SSE, ScottishPower, E.ON, EDF and npower – in the summer asking them to explain how they were going to pass on falling wholesale costs to their customers.
But Ofgem noted that not one had taken action to win customers from their rivals by using the opportunity to reduce tariffs.
Rachel Fletcher, of the regulator’s markets division, said the figures from its controversial supply market indicator “might be suggesting that there is room for price cuts or that you wouldn’t be expecting prices to go up”.
She added: “As regulator, it is not for us to tell companies how to set their prices. We are relying on the market to do that.
“But the thing that has concerned us is that in a situation where we have got wholesale costs coming down, you would be expecting some of the companies at the very least to be saying ‘here is an opportunity to gain market share by reducing our prices’.
“We haven’t seen that. That raises questions for us about the extent to which there really is competition between the large energy companies.”
The remarks come with a full-scale competition probe into the energy market under way, which could ultimately see some of the larger suppliers broken up.
Ms Fletcher said Ofgem’s decision to refer the sector to the Competition and Markets Authority was the “biggest lever” it had.