Consumers hit by price increases of up to 11.1% but data suggests wholesale prices rose by only 1.7% over last year
The "big six" energy firms are coming under increasing pressure over their recent price rises as official figures cast doubt on their claims that rising wholesale costs were to blame. Consumers are being hit by price increases of up to 11.1%. But data from the energy regulator Ofgem suggested that wholesale prices rose by only 1.7% over the last year.
According to analysts, the price rises will hit more than 17 million customers. Real wages, in contrast, have fallen to their lowest level on record.
British Gas, SSE, Scottish Power and npower have all sought to blame increases in wholesale costs for their price rises, saying that government green schemes and rising network charges were also to blame.
"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," a British Gas spokesman told the FT. "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."
SSE said the suggestion that wholesale costs had not risen over the last year was "simply false". "This is very much a global market and we are seeing increased international competition for supplies, which is putting up prices," a spokesman told the FT.
Representatives of all of the major energy firms are due to face MPs on Tuesday afternoon as the energy select committee investigates the latest prices rises. They will also go head-to-head with Ofgem's interim chief executive Andrew Wright.
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