If household gas and electricity prices soared 42 per cent in 2008 because of sky-high oil prices, why have they only dropped 4.2 per cent in 2009 when oil prices went through the floor?
The answer to that question, claims a new analysis from the watchdog Consumer Focus, is that energy companies are pocketing an extra £1.6 billion extra a year by failing to pass on huge falls in wholesale prices in the last year.
Consumer Focus, which replaced energywatch in January with a wider consumer remit, claims we are currently being overcharged by £361 million a year for electricity – that’s £13.80 per household – and by £1.3 million for gas, or £60.10 for the average home.
At current wholesale prices, it says, suppliers could afford to cut prices now and again in the winter to save average households around £157 per year.
Mark Todd, director at price comparison service energyhelpline, says that energy bills remain at record levels despite a plummet in wholesale prices in the past 12 months.
“We have thought that this was because suppliers were holding onto cash, but we believe every bill landing on consumers’ doormats contains a ‘hidden’ tax. This is a major reason why bills are coming down so slowly,” he says.
These hidden taxes are understood to be raising billions for investments in free insulation, green measures and new generation power stations to replace many existing ones which will become defunct by 2020.
In the last couple of years, energy prices have become a key political issue in the climate change debate. A Royal Society report this week, compiled by leading scientists and engineers, demands that energy prices must go higher still “if we’re going to try to preserve the environment”.
However, energy bills will soon be a pressing issue in many homes, as “fixes” taken out to beat the giant rises of 2008 begin to expire.
If these customers do nothing, says price comparison site uSwitch.com, their energy costs will rise by £100 per year as they go onto standard rate when their fixes end.
The npower fix is the first to run out, on July 31.
Mr Todd reckons that consumers who have never switched suppliers could probably save up to £378 a year by doing so now.
Will Marples, energy expert at uSwitch.com, reckons 4.6 million UK households took out fixed or capped rate energy plans as prices soared.
“Without doubt, those who fixed energy prices last year to avoid the biggest price hikes have done well,” he says.
“But as price protection ends, households could face a nasty shock if they don’t look around for their next deal.”