Ofgem to probe energy price hikes

Ofgem is to review whether energy companies are “playing it straight” with customers after finding that recent price rises have increased suppliers’ profit margins by 38%.

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The energy watchdog says company margins have increased from £65 to £90 from the typical dual fuel customer since September.

The probe follows recent price hikes by British Gas, Scottish Power and Scottish and Southern Energy. Rising wholesale gas prices were blamed for the increases.

Ofgem’s chief executive, Alistair Buchanan says in a statement that it will go beyond its usual quarterly price report “and do a comprehensive review of the retail market and our recent reforms from the consumers’ perspective.”

He adds: “Greater transparency in the market is good for consumers, investors and for the energy industry as a whole.”

Ofgem investigated prices in the energy market in 2008 but found no evidence of anti-competiveness.

The new review will be completed by March next year.

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