Energy firms urged to cut bills
The government is considering taking action to force energy companies to cut bills and pass on the benefits of cheaper crude oil costs to customers.
Speaking at Imperial College, London, energy secretary Ed Miliband said he understood that bills have not yet come down because energy suppliers tend to buy wholesale gas and electricity in advance. However, he added: “[The savings] must be passed on as soon as possible.”
Miliband also echoed recent comments by the chancellor Alistair Darling that the government will step in and take legislative action if bills remain at their current levels.
Since January 2008, the six big energy firms have introduced two rounds of gas and electricity bill hikes that have seen some households pay more than 50% more to heat and light their homes.
Despite the cost of crude oil peaking in August, bills have not got any cheaper although several firms have said there might be room for cuts in 2009.
Tim Wolfenden, energy expert at uSwitch.com, says: "This warning is simply letting the companies know that they need to act quickly if they still want to be able to operate within a self regulatory environment, otherwise regulation could be imposed.”
Ofgem, the energy regulator, recently pledged it would to continue to put pressure on energy providers to cut their prices and pass on the benefits of cheaper crude oil to their customers. Read more here.
But Wolfenden warns: “Whether the government genuinely has the appetite to wade in if suppliers are seen to be dragging their feet remains to be seen."