The watchdog has said it will review the effectiveness of the retail energy market to see if action is needed to protect consumers.

The latest analysis of retail prices by Ofgem shows that the margin on a standard dual fuel tariff has risen from £65 to around £90.

In its Electricity and Gas Supply Market Report published today, Ofgem finds that three of the Big 6 energy supply companies have already announced further price rises this winter. Only one supplier so far, EDF Energy has promised to freeze prices between now and March 2011.

Ofgem says it has no problem with firms making a profit but it wants to see clarity for consumers that the market is transparent and working as effectively as possible.

As part of the review, Ofgem will investigate the retail accounts it has recently received under new licence requirements.

Ofgem’s chief executive, Alistair Buchanan, said: “With Britain facing an investment bill of £200 billion over the next 10 years, consumers have the right to expect that the energy retail market is providing them with value for money.

“Our analysis published today shows and increase in company margins from £65 to £90 at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with consumers.”

The regulator’s investigation will assess the current state of the effectiveness of the retail energy market, review the companies’ progress on implementing earlier reforms and report on retail and wholesale prices.

This review is due for completion in March next year.

Alison Brown

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