Ofgem’s response to Energy UK

Our monthly forward look at cost and pricing trends is making the energy market more transparent for consumers.

Our supply market indicators (SMI) help consumers understand what is likely to happen to the different costs that make up their bill over the next 12 months.

We look at trends in wholesale prices, expected patterns of average household consumption, network costs, and the cost of environmental and social schemes.

Ofgem-logo-credit-OfgemThese major costs that a typical large supplier incurs to deliver energy to an average household appear to be falling, but the prices charged for energy are not. As a result, the estimated margin before tax for a typical large supplier over the next 12 months has risen to £106. We have made this clear that this is not a measure of profit but an indicator showing trends.

Consumers need a clear explanation from suppliers as to why, when costs are falling, they are not seeing cuts in energy prices as we would expect in a competitive market.

Concerns that savings weren’t being passed on to customers when wholesale prices fall was one of the reasons we have proposed a referral of the energy market to the CMA for investigation.

 

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