Recent price cuts in energy bills could have been much higher and made much earlier, according to new research.
Which? found householders on standard energy tariffs were £145 worse off last year – a staggering £2.9 billion in total.
It said energy companies failed to keep standard variable tariffs in line with falling wholesale prices over the last two years.
The gas price cuts announced by the Big Six suppliers – E.ON, British Gas, ScottishPower, npower, SSE and EDF Energy – of up to 5.1% should have been greater, between 8.8% and 10.3% “if they were aligned with wholesale energy costs”.
Electricity prices could also have been reduced by up to 10% – saving consumers at least £1.6 billion a year, the research revealed.
Which? Executive Director Richard Lloyd said: “Our analysis places a massive question mark over how suppliers have been setting prices over the last two years. They now need to explain to their customers why bills don’t fall further in response to dropping wholesale prices.”
The trade body that represents energy companies said the calculations are based on “many assumptions and don’t reflect the cheaper deals”.
Lawrence Slade, Chief Executive of Energy UK added: “Which? points out that each company allocates their costs differently and this makes it difficult to estimate wholesale costs and hedging strategies.
“Indeed its hedging assumptions for 2013 are different from Ofgem’s report based on the companies’ actual accounts. Costs are coming down but because energy companies buy ahead to fix prices and to plan with certainty, the gas and electricity we are using today has already been paid for.”
Last month Ofgem found energy customers could save up to £250 a year by switching to a fixed price tariff than a variable one despite the price cuts.