Wholesale energy prices are to be scrutinised by energy regulator Ofgem, after end of year results were this week revealed by five of the big six energy providers.
Ofgem says it is currently in the process of appointing independent accountants to look into energy prices in a bid to rid the market of "complex and unfair pricing practices".
- Ofgem to investigate energy firms' end of year prices
- The results reveal a big contrast in the difference paid by firms for wholesale gas and electricity
- Energy experts are also predicting energy firms to announce price hikes this summer
Following on from proposals laid down by Ofgem in March stating energy providers must clearly expose their prices to consumers, Ofgem is now going to investigate the 2010 figures of five of the big six energy providers.
The results reveal a big contrast in the difference paid by firms for wholesale gas and electricity, which is the price providers pay for energy before they sell it on to consumers.
This comes as today energy secretary Chris Huhne, spoke about energy prices and only a month ago Scottish Power announced massive hikes to come into force from August (see the Scottish Power to hike energy prices news story).
Rising wholesale prices are often quoted by energy providers as a reason for consumers' energy bills jumping up in cost.
Energy price comparison site, Energyhelpline, says that roughly 70% of a consumers' energy bill will cover wholesale costs, but as wholesale prices fluctuate, so will this amount, to ensure the company maintains a profit.
The end of year results highlight the stark contrast in prices; with Scottish Power paying the highest wholesale price for electricity at £68.30/MWh on average, which is 27% more than Centrica (which owns British Gas) paid at £53.69/MWh.
Scottish Power also paid the most for gas at 58.9p/th, with EDF paying the least - 15% less than Scottish Power at 51.3p/th.
Scottish and Southern Electricity is the only one of the big six energy providers not to publish its results this week, as its annual figures come out at the end of September.
An Ofgem spokesperson says: "By making companies publish full energy accounts Ofgem is working to shine a spotlight on energy companies prices to increase transparency in the energy market.
"We will be appointing independent accountants to investigate more closely the details of these accounts in the next few weeks.”
Future price hikes
With Scottish Power announcing hikes last month and British Gas saying that, unless wholesale markets change it too will most likely be announcing hikes soon, (see the British Gas says price rises are likely news story) it's inevitable that other providers will soon follow suit.
Mark Todd from Energyhelpline says: "Unless the wholesale market crashes it's very likely that other energy suppliers will shortly announce price rises.
"We're expecting increases of between 10%-15% to be announced over the summer, with rises likely to be enforced in the Autumn.
"British Gas is also releasing an interim report on the 27 July and we're predicting it will announce price rises before this date."