Ofgem to review UK energy bills

Regulator Ofgem has told energy firms they must offer simpler tariffs to help consumers compare prices.

The “big six” suppliers should also face more competition, it said.

Ofgem said it would force these firms to auction off up to a fifth of the electricity they generate, making room for new companies.

Energy firms could be referred to the Competition Commission if they do not comply with the new system, Ofgem said.

Ofgem launched a review of the energy market after claims were made that suppliers were making excessive profits.

Earlier in the year, British Gas said operating profits had risen by 24% in 2010 to £742m.

In November, Ofgem said that energy supplier’s net profit margin per typical customer rose from £65 in September to £90 in November, a 38% rise.

“Consumers must have confidence that energy companies are playing fair at a time when they are being asked to foot the £200bn bill to pay for the investment Britain needs to ensure secure and sustainable energy supplies,” said chief executive Alistair Buchanan in a statement.

One supplier, Scottish Power, will face an investigation into its pricing regime, Ofgem said.