The UKís six leading energy suppliers have come under fire from Ofgem. Suspicions are growing that the companies may be attempting to appear less profitable in order to justify the recent price hikes they have made.
A new investigation will take place to look at their hedging practices and trading profits, as well as the wholesale price which the companies pay for fuel.
A wave of price hikes were announced earlier this year amongst the energy suppliers which are now recently coming into force.
British Gas increased their annual dual fuel bill by almost £200 and this came into effect on 18th August. Scottish Power increased their annual dual fuel bill by almost £150 taking effect from 1st August.
According to the energy suppliers the price hikes are due to the overall wholesale cost of gas and electricity increasing. Yet Ofgem have reason to believe the whole process has been handled in a questionable manner.
BDO, the leading forensic accountants, have been appointed by Ofgem to investigate the finances of the ëbig sixí. They will look to clarity for consumers how retail pricing relates to wholesale energy costs, as well as the transparency of the pricing decisions taken by the companies.
Ofgem initially began the investigation in March when it found evidence that the leading six energy firms had pushed up prices faster than they reduced them when the wholesale costs fell.
The news comes just days after British Gas raised the cost of gas and electricity by 18% and 16% respectively.
E.ON will increase the average dual fuel bill for a customer paying with direct debit by 15.2%, to £1,190, from 13th September.
Southern and Scottish Electric (SSE) will also increase their prices by 18% for gas and 11% for electricity on 14th September.
EDF is yet to announce whether or not it will raise its prices.
BDOís investigations are expected to last for four months, with a report due out before the end of 2011.