Ofgem has published it's report into Electricity and Gas price increases
Ofgem,the Energy regulator announced last year that it would be conducting a quarterly review of the link between wholesale prices and domestic bills.
It followed some strident criticism from politicians and consumer groups that energy bills had failed to fall in line with the plummeting oil price.
The regulator said that oil, which peaked at $147 a barrel in July 2008, was a "key factor" in wholesale costs for UK suppliers.
This was because:
- Britain imported 40% of winter gas from Europe
- Many prices paid under gas contracts in Europe were linked to crude oil prices
- Wholesale gas prices affected wholesale electricity prices - as gas was used to generate about 40% of Britain's electricity
- The cost of coal and carbon, as well as the availability of power stations affected wholesale electricity prices.
The key complication, it explained, was that suppliers had a series of strategies for buying on the wholesale market sometime ahead of when this energy was actually delivered.
'No Cartel'
The Ofgem report repeats the conclusion drawn following a major review of the energy market - that there was no evidence of collusion between the "big six" suppliers in setting prices.
A review found no evidence of firms working together on prices, moreover, it stressed that there was no evidence that suppliers passed on increasing wholesale costs to customers, but then failed to drop prices when costs fell.
Many Industry pundits were sceptical of the findings
"We had hoped that Ofgem's report would shed more light on the state of energy pricing," said Robert Hammond, energy expert for watchdog Consumer Focus.
"However as the report is saying nothing new, and will be difficult for consumers to understand, the public will continue to be left in the dark as to whether they are paying too much for their energy.
"Consumers need firm reassurance that they are not being ripped-off by the energy companies, but that reassurance is sadly lacking in these findings. This will do little to restore consumer confidence in either the energy market or the regulator."
But the Energy Retail Association, which represents suppliers, said it welcomed the report which "demonstrates that retail prices have not risen quickly and fallen slowly"
"Furthermore, the energy regulator has found no evidence of retail prices rising by more than is justified by wholesale price rises."
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