Why aren’t the energy firms reducing gas and electricity bills?

Over the past year the UK’s energy giants have increased gas and electricity bills twice, leaving many consumers paying a fortune for their energy usage and resulting in an increased level of fuel poverty amongst UK households. Many are concerned that energy companies are very quick to increase energy prices when oil prices and wholesale energy prices rise but when prices fall they are slow to pass on any price cuts.

The issues surrounding price hikes amongst energy suppliers have resulted in fierce debate and rows amongst campaigner, the government, and the energy companies. One new government consumer watchdog, Consumer Focus, has recently stated that the price of a barrel of oil has plummeted since the summer, and is now around half the price that it was.

However, whilst petrol prices have now started to come down in response to this price reduction energy suppliers have made no move to reduce energy prices, and officials from Consumer Focus have said that they want to see energy usage costs come down as a result of the drop in oil prices. Energy firms, however, are arguing that the price of wholesale energy is still high, so they cannot cut prices yet.

A senior official from Consumer Focus stated: “Oil prices have been falling since July, yet consumers have seen unprecedented rises in their gas and electricity costs. Consumers must now be wondering why they are left waiting. We want immediate action from energy companies to reduce their prices in line with falling oil prices. This will be good not just for consumers, but for the whole economy.”

He added that he wanted the energy regulator Ofgem to get involved to try and resolve this issue.

Since the start of the year gas prices are said to have increased by over 50% according to Consumer Focus and electricity bills have increased by close to 30%. This has resulted in the average household energy bills for the year rising to £1308. However, one energy analyst has said that energy prices did not have far to fall, as they did not rise in line with crude oil prices earlier in the year.

The government has also become involved in the row, and officials have said that they want to see energy prices fall not just to aid consumers but also to aid the economy as a whole.

One government official said: “If there are benefits we want to see them feed through, not just to individuals who have to pay the bills, but to the economy as a whole to give it a boost.”

The energy price hikes have resulted in an increasing number of households falling into fuel poverty, where 10% or more of the total household income is being spent on energy bills, and many officials are concerned that the problem will get worse, particularly over the winter period.

Tags: energy prices, whilst, environment, cut, energy suppliers, electricity costs, UK's energy giants, boost