GAS COSTS YOU THREE TIMES WHAT THE ENERGY FIRMS PAY

As wholesale energy prices fall ...

THE way millions of households are being ripped off by the big energy firms is laid bare today.

Figures show customers are being charged at least three times the price their suppliers pay for gas.

Wholesale costs have halved in six months yet bills have not fallen. It means customers on British Gas’s one-year fixed-rate tariff are paying an almost fourfold mark-up.

British Gas, which supplies around 40 per cent of homes, and other firms are under fire for their costs at a time when the Competition and Markets Authority is holding an inquiry into the energy supply business.

Its parent company, Centrica, announced profits of £900million for the first six months of the financial year. British Gas cus- tomers are paying between £1.35 and £1.50 per therm.

Yet the wholesale gas price paid by suppliers has hit a four-year low of less than 42p per therm, down from 72p in December.

The other Big Six energy companies – nPower, EDF, SSE, E.on and Scottish Power – charge between £ 1.21 and £ 1.37 per therm. One therm of gas is enough to power a domestic boiler at full output for almost two hours.

Richard Lloyd, of consumer group Which?, said: ‘Energy companies

should be passing on any savings from falling wholesale and network costs.

‘It’s no wonder that consumers aren’t confident that the price they pay for their energy is fair, especially when Ofgem has reported that supplier profit margins are set to double.

‘With energy costs the top consumer concern, the competition authority must leave no stone unturned in its investigation of the market and must establish the truth behind our energy prices.’ He suggested that customers shop around, as small suppliers can be considerably cheaper.

For example, Extra Energy is offering a tariff that is almost 5 per cent cheaper than British Gas’s increased rate.

Energy suppliers say the wholesale price of gas is only part of the cost of providing their services – and that prices are not cut automatically if it falls. Despite conflicts in Ukraine and the Middle East, prices have declined sharply because a mild winter left stocks high and fracking has reduced demand for natural gas in the US.

Most firms bulk-purchase gas in advance to buffer themselves against sudden changes in the market, so wholesale price falls do not filter through to consumers immediately.

British Gas spokesman Tim Cowen said: ‘The wholesale cost of energy is now less than half the bill, which partly explains why the wholesale price can fall, but overall prices don’t.

‘We also have other costs, such as regulated transport and distribution costs, that are rising.’

The company says it is offering customers opting for the £1.50 one-year fixed-rate tariff a £50 High Street gift card to mitigate the cost – and adds that users should still see their bills fall because of ‘milder weather and improved energy efficiency measures’.

The boss of one of the big six energy companies, nPower, has said Labour’s promise to freeze energy prices if they win next year’s election is a factor in his company not reducing its prices.

But Labour energy spokesman Caroline Flint rejected claims that her party’s pledge is to blame for energy firms keeping bills high. ‘It’s always the same old story – when wholesale prices go up, energy bills go through the roof, but when they fall consumers never see the full benefit,’ she said.

The competition inquiry into the energy supply business will report at the end of next year.