The energy regulator, Ofgem, has launched a stinging attack on domestic power providers, accusing them of overcharging by failing to cut prices sufficiently.
The comments from Dermot Nolan, the head of Ofgem, come as oil and gas wholesale prices have plunged on international markets.
The big six energy companies including SSE, npower and E.ON have made no recent announcements about cutting retail prices although British Gas did reduce its tariff by 5% last August.
“I think they are overcharging in many cases,” Nolan told BBC Radio 4’s Today programme. There should be bigger cuts in retail energy bills, he added.
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Wholesale energy costs make up nearly half of a domestic bill and have fallen by about a third in the last 12 to 18 months, he said. Ofgem has said almost three-quarters of consumers remain on standard variable tariffs that have barely altered since early last year.
The regulator is now on the offensive after criticism it was not doing enough to tackle the big six.
Nolan put out a formal statement on Thursday denying Ofgem was too soft on the industry, saying there was no convincing evidence to support that case.
“The facts tell a different story. Ofgem has imposed over £200m in penalties on the industry since 2010 – £40m of this for misselling,” he said following an attack on the regulator in a Times newspaper editorial.
“Shortly after being appointed chief executive I used the strongest sanction we have by referring the market to the Competition and Markets Authority (CMA). The reason for the referral was that I believe the market was not working properly for consumers and we stand ready to implement the CMA’s final remedies to ensure consumers get a better deal,” he added.
The energy industry is still waiting to hear what measures the CMA will propose to restructure the market but it has been arguing strongly against the possible introduction of a safeguard tariff with a maximum upper limit proposed in preliminary findings last summer.
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Source: Equities.com News
(January 14, 2016 - 7:50 PM EST)
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