Consumers may like to switch energy supplier as companies 'extend' profit margins
29 November 2010
It hopes to protect the consumer by encouraging energy companies to be more transparent about their prices, which may encourage some customers to switch providers.
Ofgem will be looking into the effectiveness of the retail energy market and their price hikes to ensure Brits are getting the best deals.
For example British Gas has increased its prices by seven per cent while Scottish & Southern energy has introduced hikes of nine per cent.
Last week, the energy regulator found that the profit margin on a typical fuel tariff is £90 per customer, which is an increase of 38 per cent since September.
Ofgem recognises that successful firms will be looking to make profit but it wants greater clarity for consumers.
Alistair Buchanan, chief executive of the firm, said: "With Britain facing an investment bill of £200 billion over the next 10 years, consumers have the right to expect that the energy retail market is providing them with value for money.
"Our analysis shows an increase in company margins from £65 to £90 at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with consumers."
Annual statements from energy companies may also help customers who wish to switch provider.
That is because these statements must show the cheapest deals available with a provider and detail how a customer can switch.
However, BBC News reported that these statements will not list online deals, which could work out cheaper than those paid by cheque.
A price comparison site, such as moneyexpert.com, could help those who wish to switch energy provider as they feel they are paying too much but have no idea where to start.