Energy watchdog declines to act

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The regulator is unconcerned over competition issues in the market, although households are braced for a series of price hikes from energy firms after Npower raised gas and electricity charges at the beginning of the month.

Chancellor Alistair Darling is due to meet Ofgem chief Sir John Mogg for an explanation of the rises , as a Sunday Times survey showed that 89% of customers believe they are being ripped off by energy firms.

An Ofgem spokesman said: "There are no plans at the moment for a Competition Act referral. Britain has one of the most competitive energy markets in Europe, with changing market share between the companies, price differences and good levels of switching.

"We keep markets under constant review but we can only take action if we find evidence of anti-competitive behaviour."

Ofgem, which has the power to fine companies up to 10% of their global turnover if it uncovers breaches of competition laws, added that four million customers had changed energy providers in 2006, with a further 2.8 million switching in the first seven months of last year.

But independent watchdog Energywatch has already renewed its calls for the "big six" - British Gas, E.On, Scottish & Southern Energy, Npower, EDF Energy and Scottish Power - to be referred to the Competition Commission this year after Npower's move, which brings the annual average bill for four million households above £1,000 a year.

The Sunday Times YouGov survey found that energy firms were the biggest source of rip-off complaints from consumers - ahead of rail firms, petrol companies, local government and council tax, and dentists. Just 4% of respondents felt they gained a good deal from the energy firms.

The "big six" are set to announce record annual profits of around £4.5 billion for 2007, and have boosted returns by charging loyal customers more than switchers and keeping prices similar by raising and lowering prices within a few weeks of each other, the newspaper claims.

Soaring costs in the wholesale gas market where the companies gain supplies are behind the anticipated wave of price hikes.