Big six energy firms have overcharged customers by £2.9 billion

The recent cuts to energy bills made by the big six energy suppliers should have been made earlier and should have been much bigger, says the consumer watchdog, Which?

Which? said that the energy firms had failed to keep their standard tariffs in line with oil and gas wholesale prices for at least two years. Consequently, those households following a standard energy tariff found themselves £145 worse off by the end of 2014. The six major energy firms, therefore, charged their customers a total of £2.9 billion more than they could have done.

Energy UK, the industry body, responded to the criticism saying that firms cut their prices as soon as they possibly can.

Richard Lloyd, chief executive for Which?, said that their research questions the process used by energy suppliers to set their prices during the last twenty four months. He also feels that they needed to explain why their bills have not fallen further despite the dramatic drop in wholesale prices.

The six major energy firms are Scottish Power, RWE Npower, Centrica, E.On, EDF Energy and SSE. They dominate the energy supply market, only 5 per cent of which is supplied by smaller companies.

Which? said that these smaller suppliers are offering lower prices and yet are not able to put enough pressure on the big six to cut their prices.

Lawrence Slade, chief executive for Energy UK, said that the big energy firms buy wholesale gas on the futures market, ‘hedging’ or protecting themselves against future price increases. As a result, they do not immediately benefit from lower prices themselves and so are not able to pass any savings onto their clients. When companies can afford to pass their savings on, they do so, he said.