Trust in the energy market is being undermined by a lack of transparency about the profits being made by companies, MPs have warned.

The Energy and Climate Change Committee also criticised energy regulator Ofgem for not taking enough action to tackle the problem and restore consumer confidence.

Ofgem was urged to "use its teeth" more often and force energy firms to show they are "squeaky clean", one MP on the committee said. (See Cheap Gas & Electricity if you want to get a better deal for your energy.)

The committee recommended energy bills should be made easier to understand, allowing prices to be compared with those of other companies.

It said while improvements had been made, there remained "serious shortfalls" in the way energy companies communicated with customers, adding that resulted in deep mistrust from customers.

The committee also said the small number of people switching suppliers suggested the market was not as competitive as it could be.

Government 'slow on fuel poverty'

Ofgem's senior partner for markets, Rachel Fletcher, says: "We share the committee's goal of restoring consumers' trust. This aim underpins our reforms which seek to get energy companies to deal with consumers in a simple, clear and fair way."

The report also reprimanded the Government for not doing enough to help the millions of low-income families living in poorly-insulated homes and struggling in "fuel poverty".

Energy and Climate Change Secretary Ed Davey says: "We are using the Energy Bill to ensure that all households will be able to get the best deal for their gas and electricity as soon as possible.

"This means getting people off poor-value dead tariffs, cutting the number of tariffs and giving consumers clear personalised information on their bills so they can compare and switch supplier."

Angela Knight, chief executive of industry trade association Energy UK, defended the profits the sector makes, saying they were necessary so companies could invest in infrastructure.