Families face £230 overcharge on every energy bill as power firms 'profiteer from plummeting oil prices'


Tesco, a big buyer of energy for its stores, has compiled figures which suggest energy firms are profiteering from dropping oil prices

Families will be overcharged by an average of £230 for their energy bills next year, it has been claimed.

The effect will be to give power firms a £5.5billion windfall generated by their failure to cut charges to reflect plummeting international oil prices.

Tesco, which is a huge buyer of energy for its stores, has compiled statistics which point the finger at what appears to be profiteering on a huge scale by gas and electricity producers.

Britain's 'big six' power suppliers have been arguing for years that consumers have to pay more for heat and light because tariffs are tied to oil prices.

But the alleged rip-off kicks in when the price of crude oil starts to fall.

The price of crude has fallen by 44 per cent since July, which is starting to deliver cheaper petrol at garages.

The wholesale price of gas and electricity to be supplied next year is down just 18 per cent, and there is no evidence that customer bills are set to fall.

Tesco bosses have produced a graph that shows the wholesale price of gas and electricity exactly mirrored increases in oil prices between January and July.

However, the link was broken when oil prices fell sharply from July onwards.

The graph shows the price of gas and electricity to be supplied this winter and into 2009 has remained artificially high.

Tesco says industry regulator Ofgem has failed spectacularly to get to grips with the issue.

Domestic gas costs have surged by 50 per cent in a year and electricity by a third, adding around £400 to the annual bill.


Tesco's director of corporate and legal affairs, Lucy Neville-Rolfe, said: 'Energy prices go up very quickly with the price of oil but are very slow to come down when the price falls.

'This is very costly and bad news for consumers.

'Although oil prices and wholesale gas and electricity prices are set to keep falling, energy companies are not passing on the full benefit and so customers will have to fork out an extra £230 next year than they should.'

The beneficiaries of the unfair prices are the gas producers, the likes of BP, Shell and Centrica, together with owners of fields in Norway, Germany and Russia.

Some of these companies own the big six suppliers. For example, Centrica owns British Gas.

A Tesco spokesman said: 'Energy companies say there is always a lag of about six months between movements in oil and gas prices - but that does not explain why the oil price is falling while gas and electricity prices remain so high as far out as winter 2009.'

The Energy Retailers Association, which speaks for suppliers, denied that its member were slow to pass on falls in wholesale prices.

A spokesman said that for suppliers to be able to consider reducing their retail prices it would require a ' sustained period of low wholesale prices'.