Electricity Suppliers `Failing to Pass on Price Cuts'

Article excerpt

ELECTRICITY SUPPLIERS are failing to pass on huge reductions in wholesale prices to their domestic customers, research published yesterday by the energy regulator Ofgem reveals.

In the past four years, wholesale prices have fallen by 40 per cent and yet domestic bills, even for households which have taken Ofgem's advice and switched supplier, have only come down by 8 per cent - equivalent to pounds 21 off the average bill.

The situation is even worse for domestic consumers who have stayed with their local supplier - prices for these customers have dropped by just 3.5 per cent.

Wholesale prices account for half the typical domestic electricity bill. Had the reduction in wholesale prices over the past four years been passed on in full, then the reduction in domestic bills should have been 20 per cent or pounds 51 for the average household paying the standard tariff.

After the introduction of new electricity trading arrangements (Neta) in March last year wholesale prices have fallen by 20 per cent and yet domestic bills have come down by just 1 to 2 per cent.

Ofgem said that average domestic bills had not come down in line with the reduction in wholesale prices because supply companies had chosen to use the savings to tempt customers of other suppliers to switch. …