Energy secretary says firms should pass on savings as research finds four million households owe suppliers money.
The UK’s Big Six energy firms are facing fresh pressure to pass on the benefits of falls in wholesale gas and electricity costs from the new Conservative government.
The newly appointed energy secretary Amber Rudd has written to British Gas, Scottish Power, SSE, Npower, E.ON and EDF to call on them to lower their prices.
The call comes as new research shows 260,000 more households are now in debt to their energy supplier compared to last year. The uSwitch poll found four million UK households now owe suppliers an average of £130, up from £128 compared to 12 months ago.
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Missed savings
The increase in energy debt comes despite price cuts on standard tariffs earlier this year.
[SPOTLIGHT]The Big Six energy suppliers cut gas prices by between 3.5% and 5.1%, which amounted to a saving of between £24 and £37 on an average annual standard tariff bill.
However, the cuts fell significantly short of the actual fall in wholesale gas prices, which according to Ofgem tumbled 25% over the last year.
Consumer group Which? estimates UK households could have saved £145 on their annual bill if wholesale costs had been passed on fairly.
Suppliers have blamed the uncertainty of the election and Labour’s pledge to freeze energy bills until July 2016 for their modest cuts and failure to pass on savings.
But now that Labour’s threat is off the table the Government wants to keep up the pressure on energy companies to act appropriately to help households to a fairer deal.
In a letter seen by the BBC Ms Rudd wrote: "In light of the greater regulatory stability we are providing and continued stability in wholesale gas prices, I believe that energy suppliers should be seeking to regain the trust of consumers by reflecting this in their pricing decisions."
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Out of excuses
Which? executive director, Richard Lloyd, said energy firms are now "out of excuses" for not cutting bills and if they don’t play ball it should add weight to the case for the competition authority to step in.
Energy UK, which represents the Big Six energy firms, said: “Energy suppliers work hard to provide good service and value for money to their customers. More companies are entering the market and by shopping around customers can find deals that are both cheaper than this time last year and which match individual circumstances.
“Our members will be replying to the secretary of state in due course and the industry as a whole is keen to work constructively with the new Government to ensure energy security at a price everyone can afford.”
The Competition and Markets Authority (CMA) is currently investigating the Big Six energy suppliers. The full findings are expected to be revealed later this year.
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