Alistair Buchanan, the chief executive of Ofgem, said: "Ofgem's role is to ensure that companies can invest, but do not use investment as a shameful excuse to overcharge consumers."
He added that "we will not shy away from proposing radical reform to protect the interests of consumers".
The Independent reports that in November energy firms made on average £210 per dual-fuel bill before running costs and profits. It is expected that a review into pricing will take place in the new year.
Consumer groups have for some time been calling on gas and electricity suppliers to pass their profits back to customers, particularly the more vulnerable groups which use pre-payment meters.
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