THE energy market is “not working” and the UK’s big six companies should be passing on cheaper wholesale costs to their customers, according to the regulator Ofgem.
Dermot Nolan, who heads the watchdog, said wholesale energy costs had fallen by about a third in the last year to 18 months.
Yet, the big six – SSE, Scottish Power, British Gas, Npower, E.On and EDF – had yet to announce a corresponding cut in retail prices.
Nolan told the BBC: “The biggest component of your energy bill is the wholesale cost – it’s approximately half the bill, maybe a shade under ... it has fallen by nearly a third over the last year to year-and-a-half.
“We really should be seeing bigger retail cuts than we have seen so far.”
Figures released yesterday showed wholesale energy costs in the UK hit a five-year low at the end of last year.
Energy UK, which represents the major energy firms, insisted that there was a competitive market of 34 suppliers and that people should switch for savings of hundreds of pounds.
Its chief executive, Lawrence Slade, said the industry had “made mistakes in the past” in failing to help those languishing on variable deals, but the situation had improved alongside increased competition.
Ofgem has said 70 per cent of consumers remain on standard variable tariffs that have hardly changed since early last year.
The regulator has referred the issue of uncompetitive variable rates to the Competition and Markets Authority (CMA), said Nolan. The CMA will offer its final recommendations at the end of the month.
An Ofgem spokesperson said: “We don’t believe the energy market is working for consumers and that is why we referred it to the Competition and Markets Authority for a full competition investigation.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here