Power firms over-charging - claim

A report by the watchdog Consumer Focus states the fall in wholesale prices has saved energy companies around £1.6 billion, but this has not been reflected in average domestic bills.

Energy bills rose by 42% last year, with the average household paying £1,293 for the year.

Consumer Focus deputy chief executive Philip Cullum said consumers feared suppliers had not passed on the full cuts in wholesale prices.

He told the Independent newspaper: "Our new research for the first time shows the reality. The companies are pocketing £1.6 billion extra while millions of households struggle to make ends meet.

"Energy firms should take immediate action to put things right. A failure to act, and to ensure that people pay a fair price for energy, could have serious consequences for the sector."

But Garry Felgate, chief executive of the Energy Retail Association which represents the industry, said the watchdog had made basic mistakes in its report.

He said: "The amount of gas and electricity a customer uses can form as little as half their annual bill.

"The remainder includes other costs, such as transporting gas and power and meeting the Government's carbon emissions reduction targets. All these costs have risen sharply in recent years."