Energy bills are on the up and so are suppliers’ profits. Ofgem’s now investigating the ‘big six’ energy companies and their rising margins, but there needs to be more than just talk.
British Gas, Scottish Power and Scottish and Southern Energy are all putting their energy prices up – the first price increases from the ‘big six’ to hit existing customers for two years. They say it’s due to higher wholesale energy charges.
Yet, it doesn’t seem like these companies are struggling at all. In fact, energy suppliers appear to have made an impressive 38% increase in their profits over the last three months. All on the back of rising costs to us.
Why don’t they pass on price drops?
So when wholesale energy prices go up, costs increase for us, but when they drop we don’t see the benefits. This is a subject that many commenters raised when we asked the question ‘Can British Gas justify 7% price increases?‘
Marjie C was very clear with her answer. ‘No they can’t. If they had passed on the full 40% price drop of wholesale gas to their customers over the last few years then it would be reasonable. But they didn’t,’ she complained. ‘But the moment prices start to move upwards they become very vocal about what it’s costing them.’
Ofgem to investigate
Finally, someone’s starting to take notice. Ofgem, the industry’s watchdog, has announced that it will investigate these energy giants in order to make sure they’re not greedily lining their pockets.
This is especially good news, since energy prices are the number one financial concern for consumers, according to our recent survey, which also showed that we now think energy suppliers as less trustworthy than banks. Only a fifth of the 2,000 people we asked said they thought energy suppliers were trustworthy.
However, let’s hope the investigation won’t be all talk and no action. Ofgem must identify what needs to be done and do it. Only then will it be protecting all of us. Sadly, even if changes are made, they’re unlikely to be until well after the winter period when bills are at their highest.
Energy suppliers have clearly got a lot of work to do to get back in our good books – will this investigation do enough to improve standards or do you still feel like they’re ripping you off?