28/10/2013 10:04 GMT | Updated 28/10/2013 10:11 GMT

David Cameron Demands Big Six Energy Firms Explain Price Hikes

British Prime Minister David Cameron addresses the media at the end of a two-day EU summit at the European Council building in Brussels, Friday, Oct. 25, 2013. Migration, as well as an upcoming Eastern Partnership summit, topped the agenda in Friday's meeting of EU leaders. (AP Photo/Yves Logghe)

The energy companies should answer to their customers for the latest round of price rises, as new evidence suggests they are greater than the increases in wholesale energy costs, Downing Street has said.

Data from the industry regulator, Ofgem, shows that while price rises announced this autumn by the companies have averaged 9.1%, wholesale prices have risen by just 1.7% - adding just £10 to the average household bill of £600.

The Prime Minister's official spokesman said that it was up to the companies to justify their charges to consumers, after firms pointed to wholesale energy cost rises as one of the reasons why they had to hike prices.

"It is for the energy companies to explain the decisions they have taken around bills to their customers," the Prime Minister's spokesman said.


The mounting furore over energy bills comes after Scottish Power hiked prices by 8.6%, adding £113 to annual bills. Scottish Power's increase came after Npower said it would up prices by 10.4%, SSE announced it would put up prices by 8.2% from 15 November and British Gas would increase theirs from 23 November by 9.2%.

Labour said the figures showed that the Government was failing to get tough with the companies amid mounting public concern over the soaring costs to households.

Shadow energy secretary Caroline Flint said: "Energy companies always blame rising global energy prices for putting up people's bills, but these figures show that under David Cameron they've been increasing their profits on the back of spiralling energy bills for hard-pressed households.

"If energy companies won't treat their customers fairly, then people deserve tough action from the Government. But David Cameron shows how out of touch he is, refusing to act."

The latest disclosure comes as the "Big Six" energy companies prepare to give evidence to the Commons Energy and Climate Change Committee when they are expected to face a rough ride from MPs.

Ofgem said that its estimates for the wholesale price were based on how a representative supplier would typically buy energy, using forward purchases of gas and power at 12, 18, or 24 months ahead, to smooth out volatility in prices.

These buying strategies vary between suppliers, meaning each sees different overall changes to wholesale energy costs.

But Ofgem said that looking ahead to this winter, the price paid for energy by suppliers was rising sharply compared to last winter, with gas up 8% and electricity up 13%.

Other factors in bill increases include rising network charges and Government levies.