Ofgem criticises 'Big Six' for not handing down savings to customers

Between 1 January 2020 and 30 June 2020, people who switched energy supplier for both gas & electricity with Uswitch saved an average of £387.

Ofgem has slammed the UK's 'Big Six' energy suppliers over their failure to amend energy bills in line with a fall in wholesale prices in an open letter to the firms.

The energy regulator claimed the firms risk 'undermining public confidence' with their inaction and should explain to customers exactly why the savings from falling wholesale energy costs have not been directly passed on to homeowners.

Ofgem chief executive, Dermot Nolan, said: "The Big Six suppliers tell us that they think the market is competitive, but our research shows that consumer trust is low.

"Therefore, if suppliers are going to start rebuilding that relationship they need to take the initiative and explain clearly what impact falling wholesale energy costs will have on their pricing policies.

"If any of the companies fail to do this, consumers can vote with their feet. Independent suppliers are currently offering some of the cheapest tariffs on the market."

A number of the bigger energy suppliers often by energy in advance, known as the forward market, to avoid any short time rises in costs. However, currently the forward prices for next winter are actually 16% lower for gas and 9% lower for electricity than last year.

Another alternative is for companies to buy the energy for next day delivery, called spot prices. Again, figures have fallen on last year with spot gas prices down 38% on last June - the lowest price they have been at since September 2010. Electricity spot prices were also down 23% on last year, again taking them to their lowest figure since April 2010.

Spot prices tend to be more widely used by smaller energy suppliers, with the bigger suppliers tending to opt for the forward market option.

A spokesman from Energy UK, the representative of the energy industry, defended the energy firms however, reiterating the fact many suppliers often bought gas a number of years in advance

He said: "Wholesale energy is just one of a number of costs outside of an energy company's control, which make up a household bill.

"All energy suppliers aim to hold costs as low as possible for as long as possible. There are now 24 domestic energy retailers in the UK. They buy gas and electricity months and even years in advance to smooth out the swings in the market."

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