Energy bills burning a £1.6billion hole in households' pockets

25 June 2009 / by Rachael Stiles
British consumers are being overcharged for their energy by more than £1.6billion a year, according to new research from Consumer Focus, an average £74 per household.

While the wholesale cost of energy has fallen, energy providers have failed to pass on any or all of the savings to their customers. Some companies, such as British Gas, have cut their energy prices by 10 per cent or more since January, but not enough to reflect the true savings which could be made.

According to Consumer Focus' analysis, consumers should be paying 7.4 per cent less for their gas, which equates to a £60.10 annual saving, and should be given a minimum reduction of 3.1 per cent on their electricity prices, saving them at least £13.80 each.

Furthermore, if current conditions in the wholesale energy market remain the same for the remainder of the year, subsequent cuts in wholesale gas and electricity prices should reduce by at least eight per cent and four per cent respectively.

The consumer watchdog is calling on energy suppliers to reduce the cost of household energy bills to reflect the current wholesale costs without delay, because an immediate cut, coupled with the further potential cuts by the end of 2009, could save each household a total of £157 by the time winter rolls around.

Commenting on the research, Philip Cullum, deputy chief executive of Consumer Focus, said: "Consumers have feared for months that the big six suppliers might not have passed on the full cuts in wholesale energy prices, but the companies claimed to have acted fairly. Our new research for the first time shows the reality. The companies are pocketing £1.6 billion extra, while millions of households struggle to make ends meet.

"Energy firms should take immediate action to put things right for their customers. A failure to act, and to ensure that people pay a fair price for energy, could have serious consequences for the sector."

Consumer Focus believes that if energy companies fail to pass on the appropriate cuts to their customers, then the Government should take steps to ensure households benefit from the savings.

Commenting on the results of the Consumer Focus research, Scott Byrom, utilities manager at, said that the onus also lies with the consumer to get a better deal for their energy: "If all customers were active in taking advantage of what's on offer they would force energy suppliers to be more competitive," he said.

"Despite this year's price cuts the impact of last year's unprecedented price hikes is still hitting wallets hard, so it's crucial to take action immediately to cut costs wherever possible. There are definitely savings to be made by taking ownership of your bills and staying savvy to the best deals on the market."

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