Energy suppliers 'failing to pass on price cuts'

Despite falling world oil prices, Britons are still paying more to heat and light their homes than last summer, with household electricity and gas bills averaging more than £1,200 a year.

The reduction in wholesale prices means gas bills could be slashed by up to 10% and electricity by 3.5%, leading to annual savings of £96.40, according to research by the Consumer Focus watchdog.

By failing to pass on the full discounts to every household, power companies are estimated to be making an extra £2.2 billion, the newspaper said.

Robert Hammond, energy expert for Consumer Focus, which is publicly funded, said: "The fact that wholesale prices are at a three-year low adds further to the already heavy weight of evidence that greater energy price cuts are needed.

"These declining costs will contribute to energy firms paying less for gas and electricity. So, it is only right that these price cuts are passed on to consumers, many of whom are struggling to afford high energy bills.

"If the suppliers do not want to be accused of treating their customers unfairly they must make immediate price cuts."

Industry regulator Ofgem has given suppliers until next week to explain why they have not passed on lower wholesale electricity and gas prices to households.

Garry Felgate, chief executive of the Energy Retail Association, which represents suppliers, said power companies buy much of their energy in advance and the current price on wholesale markets does not reflect what they paid for their supplies.

He said: "Energy prices have come down for most customers this year following falls on the wholesale market.

"However, despite recent decreases, prices are still volatile going into this winter. Much of the energy we are all using now was bought last year when prices were at their highest, and there is always a time lag between when prices change on the wholesale market and when these feed through to domestic bills.

"It is also important to remember that the wholesale price of energy only contributes to part of the cost of a domestic bill. Increasing environmental, transmission and distribution charges and metering costs are all contributing factors.

"Energy suppliers do their utmost to ensure that their customers are protected from volatile energy markets, but they have to operate in an environment where the price of energy, the demands of a low carbon economy, and the need for huge investment in infrastructure compete."