Ofgem calls for downward pressure on energy prices

Good news for UK households. Energy bills are set to be reduced after Britain’s six biggest fuel suppliers were warned to overhaul their tariffs or face having their prices capped.
With figures showing some 5.5million households are facing fuel poverty (where 10 per cent or more of their income goes towards fuel bills), energy watchdog Ofgem has now ordered the UK’s ‘Big Six’ energy companies to make changes to confusing and expensive tariffs or endure tougher sanctions, such as the first price controls in ten years.
“Parliament has given us the task of trying to create an effective market where competition is the downward pressure on prices,” the regulator said.
“We think that’s the way to go, although we haven’t ruled out regulation, particularly for more vulnerable customers, if our reforms don’t work.”
British Gas, EDF Energy, E.ON, Southern Electric, Scottish Power and npower could also face an inquiry by the Competition Commission, which could put an end to their near-100 per cent domination of the UK energy market.
The Ofgem announcement comes days after EDF was urged to cut energy prices after revealing annual profits of almost £1.6billion.
The 2011 figure represents an 8.5 per cent increase from the previous year, which suggests the major energy firms are continuing to enjoy huge profits at a time when UK homeowners are struggling to pay their gas and electricity bills .
Ann Robinson, Director of Consumer Policy at uSwitch.com, said: “On the back of the profits announced today, we would urge EDF Energy to relieve the pressure on its UK household customers by passing on the benefits of lower wholesale prices.”
“It previously cut its gas prices by 5 per cent on the 7th of February and now is the time to go even further.”