The Energy Advice Line has backed
calls by Ofgem for suppliers to explain why the benefits of falling gas prices
have not been passed on to business and domestic energy users.
According to news reports, UK
wholesale gas prices for November and December deliveries hit a record low at
the end of October, which means the cost of buying natural gas dived by almost a
quarter during 2014.
Julian
Morgan, managing director of the price comparison, switching and advice service
for energy users, said suppliers had not yet signaled any meaningful cuts to
bills despite the falling costs.
“Some
suppliers have made some changes to their tariffs, and there are some good
deals available for consumers who want to lock themselves in to fixed-term
deals,” Mr Morgan said.
“But
generally, retail prices have remained
static while the raw cost of energy has plummeted.
“Suppliers need to provide a full
explanation of this to consumers, who do not understand why they are not seeing
at least some benefit from falling gas prices. After all, when wholesale prices
rise, suppliers are very quick to pass that on.
“Ofgem is correct in demanding an
explanation. It seems there is very little option for consumers but to apply
public pressure to force suppliers to do the right thing.”
In response
to the record-low wholesale prices, Ofgem, which has already referred the energy industry
for a full competition inquiry, said companies owed it to their customers to
explain their pricing decisions.
In turn, suppliers have argued that an isolated fall in wholesale prices
was not enough to pass on to customers because they bought energy days, weeks,
months and even years in advance.
“Ofgem
was correct when it said that suppliers need to rebuild customer and the only
way to do this is to explain to energy users why tariffs are at the levels they
are,” Mr Morgan said.
“Meanwhile,
this is a crucial time for both business and domestic energy customers to keep
their eye on retail prices and shop around.
“There
may be suppliers prepared to break cover and do the right thing as their raw
costs fall.
“While
there is still ample room for the UK market to be more competitive, not all
suppliers behave the same way, nor do they all offer the same deals.
“By
failing to shop around, consumers can end of paying a lot more than they need
to, and this can run to hundreds of pounds of year.”
The
Energy Advice Line is the UK’s leading impartial comparison, switching and
advice service for businesses and householders.
It actively campaigns for reform of the UK’s energy market to boost
competition, get consumers a better deal from suppliers and lower energy
prices.
The
Energy Advice Line’s price comparison and switching service is free and
completely impartial. Consumers can obtain energy quotes with a few computer
strokes based on a diverse panel of energy suppliers including the major
players and smaller independent utility companies.