The profit margin energy companies make on a standard dual fuel tariff is now around £90, an increase of 38 per cent from September, according to the latest analysis of retail prices from Ofgem.
Whilst Ofgem would expect efficient firms to make a profit, it says it wants clarity on behalf of consumers that the market is transparent and is working as effectively as possible.
Ofgem says it will review the retail energy market to decide if further changes are needed to ensure the market works in the interests of consumers and to increase transparency in the
energy market.
As part of this review it will investigate the retail accounts, recently received by Ofgem under new licence requirements.
Britain's biggest
energy supplier, Centrica-owned British
Gas, and peer Scottish and Southern have both recently announced price hikes for gas and electricity, blaming rising wholesale
gas prices and related costs for the increases.
"Our analysis today shows an increase in company margins from 65 pounds to 90 pounds at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with customers," said Ofgem's Chief Executive.
"Ofgem will review the retail energy market to decide if further changes are needed to ensure the market works in the interests of consumers," the regulator said.
Commenting on Ofgem's review of the retail energy market, Ann Robinson, Director of Consumer Policy at
uSwitch.com, said: "We welcome this move from Ofgem to improve the transparency of the retail energy market.
"Consumers have experienced prices both falling and rising this year alone and this review should help them to understand the reason why and to give them confidence in both their own supplier and the market.
"While this review is going on, it is important that consumers don't just sit back and wait. We are heading into a cold winter and energy prices are on their way up.
“There is now £419 between the cheapest energy plan and most expensive in the market - this is the equivalent of saving a third off your yearly household energy bill so I would urge consumers to start making the market work for themselves today by shopping around for a better deal."
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