Two big six energy companies have responded to claims large energy suppliers are “running a cartel” by raising their standard variable tariffs (SVT) in line with the summer price cap.
A report on the website of The Sun said the big six suppliers, who have all raised their SVTs in line with the £1,254 cap level, have been accused of running a “cartel”.
Yet two of the large suppliers have hit back at the claims and stress the new default tariff simply reflects the regulator’s assessment of supplier and wholesale costs.
Stephen Forbes, chief commercial officer at SSE, said: “The new default tariff cap reflects Ofgem’s assessment of suppliers’ costs.
“If some suppliers want to price below costs and make a loss, that’s their choice. Time will tell how sustainable these business models are.
“The problem is, when suppliers can’t cover their costs and go bust, it’s the customers of more responsible businesses that are left to pick up the tab.”
Meanwhile an EDF spokesperson said: “Ofgem has raised the SVT cap to what they believe to be a fair price.
“They confirmed that costs had increased significantly in the market which has also been evidenced by the collapse of several small suppliers.
“Ofgem’s initial cap reflected wholesale prices in the first half of 2018, which over the course of the year had risen by 26 per cent.
“As a responsible and long-term business, it is important that we reflect the costs that we’re facing.”
Earlier this month Ofgem announced the default price cap on standard variable tariffs (SVTs) is to rise by £117 to £1,254 a year.
The price cap for pre-payment meter customers will increase by £106 to £1,242 a year for the same period of a six-month “summer” price cap.
The new level will come into effect on 1 April and will be reviewed again later in the year.
The regulator cited a rise in wholesale energy costs as being one of the factors behind the increase.
Yet analysts at Cornwall Insight recently predicted the cap will decrease in October due to wholesale costs beginning to fall.
Vocal critics of the decision made by large suppliers to raise their default tariffs include smaller energy suppliers.
Hayden Wood, co-founder and chief executive of renewable energy supplier Bulb, is one critic who has accused them of “ganging up” around the cap.
Wood said: “We can’t believe that the big six are once again ganging up around the price cap and squeezing every last penny they can out of their customers.
“While they add hundreds of pounds to their customers’ bills wholesale energy costs are actually falling.
“It’s clear big six tariffs don’t represent good value for their customers – the price cap should be a limit, not a target.”
The Bulb boss added his company will not be hiking prices when the new cap level is introduced.
Last year the London-based supplier raised its prices a total of three times, citing increases in the wholesale cost of energy.