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Ofgem on track to slash £500million from energy bills

16 December 2008 / by Rachael Stiles
Energy watchdog Ofgem is on track to cut £500million from energy bills in unfair premiums, it has said, with £300million already taken off.

The industry regulator has launched a probe into the energy market in order to single out customers which are paying over the odds for their energy, such as those on pre-payment meters, the four million households which are not connected to the national gas grid, and others who are missing out on the best deals.

The big six energy companies have indicated to Ofgem that at least another £200million can be removed from the bills of people who it says are not being treated fairly by the energy industry.

Despite the probe's progress and promising signs of success, however, Ofgem is critical of the pace with which the cuts are being made; it believes that the process could be speeded up, that the industry is not responding as well as it should be, and threatens to take the matter to the Competition Commission in the New Year if it continues to be dissatisfied.

"We've seen progress but it's certainly not the endgame," said Ofgem chief executive Alistair Buchanan.

"We've seen encouraging signs since the end of our initial investigation, but we demand more and quicker action for those customers currently losing out."

He added that Ofgem is about to "consult on new rules to end unfair pricing in future."

Despite the price cuts being afforded to those who were being discriminated against for one reason or another, and those projected for the wider market as wholesale energy prices come back down, comparison website says that in January 2009 energy bills will cost households £250 a year more than in January 2008.

This year, bill payers have seen their energy costs rise by an average of 42 per cent, or £381, so a 10 per cent price cut could have little impact on household energy bills, according to, shaving just £129 off the average bill, while a 20 per cent cut would make gas and electricity bills £259 cheaper on average, rendering the cuts insufficient to help consumers with this year's winter fuel bills.

While more than 15 million households have said that they will be turning their thermostat down this winter in a bid to save money, urges them to continue taking action to keep the costs down, like making sure they compare prices and switch energy provider to get the best deal.

"Rumours of price cuts tomorrow could be enough to stop consumers from cutting their own energy bills today. This is a wasted opportunity as consumers are yet to feel the full impact of this year's price rises in their winter bill, but still have time to do something positive about it." said Ann Robinson, director of consumer policy at

"Rather than waiting for suppliers to reduce prices, I would urge all householders to take action now by ensuring they are paying the lowest possible price for their energy and learning to use less of it.

"Moving to dual fuel, paying by direct debit and signing up to an online plan will all help save money - in fact switching to a competitive plan could save you up to £350.

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