Data gathered by Ofgem has revealed that wholesale energy prices have gone up by less than 2% in the past year. A fraction of the increase in energy bills which analysts say will affect more than 17 million households.
The energy regulator said it worked out industry costs based on the hedging techniques employed to buy wholesale energy by gas and electricity suppliers.
Four of the big six have raised prices to date
British Gas, npower, ScottishPower and SSE have all raised their gas and electricity prices in the past few weeks. Each company has blamed the hike on higher wholesale costs as well increased distribution charges and green subsidies.
E.ON and EDF Energy are expected to follow suit with price rises of their own.
‘The Ofgem methodology is […] an approximation’
However, a spokesperson from British Gas disputes the claims and told the FT: “The prices that individual suppliers pay depend on their own hedging strategies, and the Ofgem methodology is, at best, an approximation of what those hedging profiles are.”
“We buy a certain amount of gas more than two years in advance, and if you look at the 24 month figure to October 2013, there has been an 18% increase in the wholesale cost.”
A spokesperson for SSE added that wholesale prices had gone up significantly in the past year: “This is very much a global market and we are seeing increased international competition for supplies, which is putting up prices.”