Gas and electricity companies are making even more money out of consumers than they were three months ago, Ofgem's chief executive, Alistair Buchanan revealed yesterday.
When Ofgem announced an inquiry into the power industry in November, margins for the six biggest suppliers had risen by 37 per cent from £65 to £90 a year but following two more price rises those margins had soared by 49 per cent to £97, he told MPs.
The Big Six firms, who control 99.7 per cent of residential accounts, have been accused of raising bills steeply when wholesale costs rise but keeping hold of the difference when they fall.
Giving evidence to the Commons Energy and Climate Change Select Committee, Mr Buchanan indicated Ofgem had finally lost patience with them. He disclosed Ofgem was investigating alleged misselling by four of the Big Six amid evidence salesmen had been posing as representatives of Ofgem and National Grid.
In a series of critical remarks, he complained the Big Six had experienced a "very sharp increase" in margins and had often been guilty of delivering "substandard service". "All of which leads me to feel this is a very important and timely review on behalf of the consumers to make sure that the companies are not abusing their position," he said.
When Ofgem's inquiry reports back in March, the regulator could seek either enhanced powers to crack down on the Big Six or refer them to the Competition Commission, he disclosed.
Asked if Ofgem was really prepared to take such strong action, he replied: "Correct. We really need to analyse this very significantly. Having taken a long hard look at the numbers...do we think everything is going right or do we have to look at a more radical situation?"
The energy companies were rated worse than banks for customer service, which was "not good", Mr Buchanan said.