Ofgem to investigate rising energy prices
Energy companies are facing a fresh investigation following the latest round of price hikes. Ofgem, the industry's regulator, claims firms' profit margins have widened substantially with a net profit of £65 per customer in September rising by 38% to £90 today.
It will now investigate whether more action is required to protect consumers and force providers to lower their prices.
The regulator is expected to complete its review by March 2011. However consumers should not be celebrating just yet – the last investigation in 2008 found no evidence of anti-competitive behaviour.
Alistair Buchanan, chief executive at Ofgem said: "We will go beyond our usual quarterly reports on prices and do a comprehensive review of the retail market and our recent reforms from the consumer's perspective."
The first of the price hikes kicked in this week, with Scottish Power increasing gas prices by 2% and electricity by 8.9% adding an estimated £52 to the average standard dual fuel bill. In December British Gas customers will see their bills rise by 7%, while Scottish and Southern customers face a hike of 9.4%.
Although only three of the big six have announced price rises so far, the remainder are expected to follow suit before the winter is out.
Mark Todd, director of energy comparison site, Energyhelpline.com welcomed the review. "There have been worries about how effectively the energy market has been functioning for some time and hopefully the review will remove any suspicion of blatant profiteering and shed greater transparency on the system.
"Of course energy companies have to return a profit in a privatised market, but some customers are concerned that the pendulum has swung too far in favour of the shareholder."
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