The country’s largest energy suppliers paid £3.8 billion too much for wholesale power than they should have done, according to the Labour party.
It claims the ‘Big Six’ suppliers’ statements on spending over 2010, 2011 and 2012 show they splashed billions more compared with market prices in the same years.
They used figures for the market price provided from small supplier First Utility, which is nipping at the heels of the Big Six.
Labour’s Shadow Energy Secretary Caroline Flint suggests it now looks like suppliers “deliberately inflated prices” leading to a rise in household energy bills.
She said: “These figures reveal the full extent of the way consumers have been overcharged for their electricity. Energy companies always blame wholesale costs when they put up bills, but it now looks like they’ve deliberately inflated prices to boost profits from their power stations.”
The Labour MP said regulator Ofgem has “serious questions to answer” about the way it monitors whether companies have bought electricity from themselves.
Suppliers don’t reveal where they buy energy from, so it is unclear how much, if any, of the £3.8 billion is “deliberately inflated”.
However a Labour spokesperson told ELN: “It’s up to people to draw their own conclusions. It just happens that all the Big Six have their own power stations, if they pay higher prices that would make generating more profitable.”
But trade body Energy UK stoutly defended its members and said suppliers pay the “most competitive price they can” for gas and electricity.
The body suggested Labour’s analysis doesn’t take into account the whole picture: “The overall costs of wholesale energy, published by Ofgem from the segmented accounts it gets from the large energy companies, include a number of costs so are not purely market prices. Also, as suppliers buy their energy ahead so its there when customers want and need it, averages in this area don’t give the true picture.”