UK’s ‘Big Six’ Respond to Ofgem: Prices Unlikely to Decrease

The UK’s top six energy giants have responded to Ofgem’s call for reduced utility costs stating that it is not likely there will be any further cuts for energy tariffs over the next year. The statement comes as a response to Ofgem’s inquiries into the possibility of energy companies paying forward recent decreases in the cost of energy in the wholesale market.

Although Ofgem has strongly encouraged and requested for the six major industry leaders to drop prices, the watchdog cannot officially enforce utility price costs. Ultimately it is up to the six big energy leaders to set price standards for the UK industry.

Peter Luff, MP and chairman of the Business and Enterprise Committee, has stated that the current energy markets are not operating properly. Ofgem has estimated that decreasing tariffs would ultimately help increase suppliers’ profit margins per dual-fuel customer up to £60  by the end of the year.

However, ‘the big six’ say that there are costs outside of the wholesale energy market which are causing the utilities to be unable to lower their prices, and which make up almost 40 percent of energy bills. The industry leaders say these other costs are rising increasingly. 

Consumer Focus, a advocate for utility consumers, said that the energy companies are just using these ‘other’ costs as a means of justifying higher domestic bills, despite increased margins and cheaper wholesale natural gas prices.