Energy regulator Ofgem has questioned why the ‘Big Six’ energy companies’ prices haven’t dropped after the cost of gas slumped last month.
In a letter to the large suppliers Ofgem warned they risk “undermining” public confidence in the energy market if wholesale costs continue to fall by not explaining their pricing.
Early June gas prices for next day delivery reached their lowest level since September 2010 and are now around 38% below this time last year.
It was the same for electricity, with prices hitting their lowest point since April 2010 at the start of June.
Meanwhile energy analysts at Platts noted demand for gas slumped by 12% in May.
Ofgem Chief Executive Dermot Nolan said: “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.”
He said independent suppliers currently offer some of the cheapest tariffs on the market.
Bigger suppliers rebuffed the concerns, suggesting they use low prices to balance out high prices.
An E.ON spokesperson said: “It’s critical to remember that taking spot readings of one particular part of the markets, at one particular time, doesn’t represent the whole picture and in this case you also need to look at the long and medium term.”
While npower said: “We constantly monitor gas and electricity wholesale markets, with the aim to offer our customers competitive tariffs and protection from the volatility of these markets.”
EDF Energy also said it kept its prices “under constant review” adding it understands “the importance of value to our customers”.
The regulator has referred the Big Six to the Competition and Markets Authority which is expected to announce an investigation into competition in July.
EDF Energy said it kept its prices “under constant review” adding it understands “the importance of value to our customers”.