Regulator Ofgem has announced sweeping reforms of the energy market after revealing the profit margins of the energy firms have risen to £125 per customer per year, from £15 in June. Ofgem’s latest report on prices shows that the average dual fuel bill now stands at £1,345.
Ofgem’s Chief Executive Alistair Buchanan said: “When consumers face energy bills at around £1,345 they must have complete confidence that this price is set by companies competing in a fully competitive market. At the moment that is not the case.
“That is why a radical break with the past is needed. Ofgem’s tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition. Suppliers have told Ofgem they want to restore confidence in the industry and now they have the chance to do so.”
The regulator says they will bring in “radical reforms” because competition is being stifled by a combination of tariff complexity, poor supplier behaviour and a lack of transparency.It is also seeking more powers from Government to come down hard on energy suppliers that break the rules.
Energy Secretary Chris Huhne responded: “I want to give Ofgem more teeth and customers more rights, including a faster switching time and better information from suppliers. In addition to the action we are already taking, on Monday I am meeting with energy companies, consumer groups and the regulator to ensure we are working together to help consumers save money on their energy bills this winter.”
Ofgem will publish its detailed proposals in late November for consultation.