Ofgem figures fire up profits debate ahead of MPs grilling energy bosses

Wholesale energy costs on the average household dual fuel bill have gone up by just £10 in the past year, according to Ofgem’s latest supply market indicator data.

The regulator estimates annualised wholesale costs rose 1.7 per cent from £600 in October 2012 to £610 this month, while other costs rose by £40. Profit margins across the industry more than doubled over the same period, from £45 to £95.

The figures call into question industry claims that wholesale costs were a significant driver behind recently announced average price hikes of more than 8 per cent.

Executives from the big six energy companies face a grilling from MPs on the Energy and Climate Change Select Committee on Tuesday about the reasons behind escalating prices.

However, energy companies have consistently complained Ofgem’s methodology is flawed. British Gas said the price it paid for gas two years in advance had risen 18 per cent. Wholesale prices depend on individual firms’ hedging strategies and the regulator’s figures are “at best, an approximation”, a spokesperson said.