The £1.6bn energy rip-off

Energy suppliers are ripping off customers to the tune of £1.6 billion by failing to pass on falling energy prices, a consumer watchdog revealed this week.

Consumer Focus found that gas prices should be at least 7.4% cheaper than they are currently, while electricity should be 3.1% cheaper.

Energy providers have pocketed an extra £1.6 billion by keeping energy prices artificially high, Consumer Focus said, calling on the government to step in.

The report follows a 42% hike to energy bills during 2008, with the average household now paying nearly £1,300 per year for gas and electricity.

“The energy companies must take responsibility for this, and if they don’t then we will have to look to the government,” a Consumer Focus spokesperson said.

“The six major players’ strategies are so similar that you have to question the competition element,” he added

Price comparison site Moneysupermarket.com said consumers are partly responsible for high energy prices because of their unwillingness to switch energy providers.

“Unfortunately the majority of UK bill payers are still willing to remain on the same tariff and provider and do nothing proactive to change to a better deal,” said Scott Byrom, Moneysupermarket.com utilities manager.

“This means we have an uncompetitive energy market which is only a good thing for the suppliers.”

Garry Felgate, chief executive of the Energy Retail Association, defended the energy industry’s decision not to lower prices and accused Consumer Focus of misrepresenting the true cost of supplying energy.

“The amount of gas and electricity a customer uses can form as little as half their annual bill,” Felgate said.

“The remainder includes other costs, such as transporting gas and power and meeting the Government’s carbon emissions reduction targets.

“All these costs have risen sharply in recent years.”