The ‘Big Six’ energy giants will defy growing public anger and the demands of the energy regulator by refusing to cut gas prices at least until the spring, despite the fact that the UK is sitting on a glut of cheap wholesale gas.  The price collapsed last week to 34p a therm, whereas this time last year it was £1.  Alistair Buchanan, chief executive of industry watchdog Ofgem, has said continued high prices do not appear justified and plans to ‘name and shame’ the companies that refuse to adjust their tariffs to changing wholesale prices.

Alistair Buchanan, chief executive of Ofgem, has plans to ‘name and shame’ the companies that refuse to adjust their tariffs. Last month, he wrote to all the companies, demanding that they explain why they were not cutting prices while the cost of wholesale gas was falling. He is expected to publish the industry’s response before the end of the month and will set out his plans for action. Buchanan is under pressure to get tough because the industry is perceived to have successfully undermined his role as a consumer champion.

However, he has only limited powers, including another referral to the Competition Commission, which only last year cleared the Big Six – British Gas, npower, Scottish Power, Scottish & Southern, EDF and Eon – of anticompetitive behaviour.

In their replies, the energy companies are expected to argue that the gas consumers are buying today was bought by the energy companies up to two years ago when wholesale prices were much higher.

They will also stress that the ‘non-gas’ elements of gas prices, including items such as transport costs and government environmental measures, have gone up by 44 per cent.

But last Friday one energy company, first:utility announced that its online tariff would be cut by 14.5 per cent and explained it was reacting to the fall in wholesale prices. Despite recession and the huge oversupply of gas, households are still paying an average bill of £1,200 a year.

According to energy price expert ICIS Heren, a major factor behind the surplus is that higher UK prices mean that giant liquefied natural gas tankers now dock at Britain’s state-of-the-art terminals with increasing frequency.

Fifteen per cent of UK gas now is supplied by LNG tankers compared with virtually nothing last year.

A spokesman for the Energy Retailers’ Association said: ‘We have seen energy prices falling for the vast majority of customers this year.

‘Despite these falls, the wholesale market still remains volatile and a challenge for energy suppliers coming up to the winter.

‘Customers have been protected from the massive rises in wholesale prices last year, wholesale price rises that were not fully passed on at the time, this at a time when companies are investing billions of pounds in new generation capacity to ensure an essential, reliable and safe energy supply to their customers.

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