Time for some Ofgem clout as households brace for even higher bills

FORGET the turkey - it's the stuffing that households are getting from the big six energy suppliers that's fast becoming a festive perennial.

Three companies have increased their prices in the last month and Npower will follow on 4 January. The result will be record winter bills averaging 630 per household, according to energyhelpline.com. But the latest revelation is that consumers will also foot the bill for a new generation of environmentally friendly power stations as the government pushes the UK towards a low carbon energy market.

Energy companies claim the shift will cost them more than 200 billion over the next 20 years - a cost that will doubtless be borne by their customers. That could translate into an extra 500 a year on the average household energy bill, comparison site uSwitch has claimed.

Energy regulator Ofgem estimated earlier this year that bills could rise by 25 per cent over the coming decade, largely to pay for renewing the UK's energy infrastructure.

Unsurprisingly, Energy Secretary Chris Huhne dismissed the uSwitch estimate as "bonkers", claiming the real figure was closer to 160. He then pointed out, correctly, that bills would be lower if more companies entered the market and made it more competitive.

He could also have pointed out that most households could reduce their bills markedly if they exercised their right to move to a cheaper tariff. The growing influence of comparison websites hasn't all been positive, with the focus on price resulting in many insurance customers taking out unsuitable policies, but they have transformed the way we think about energy tariffs.

The ability to switch energy supplier is still relatively new, having only been made possible with the liberalisation of the gas and electricity markets in the nineties, but it has the potential to empower consumers and provides a vital option not previously available. The problem is that too few people take advantage, certainly not enough to have a moderating influence on energy suppliers. As recent weeks have shown, the big six still have a myopic view of the way in which changing wholesale prices should be reflected in household bills.

Consumer Focus Scotland recently published research showing that about a million Scottish households are in a position to save 100 a year on average by transferring to a cheaper tariff. If you're looking for a financial New Years resolution and you're among the 48 per cent of Scottish households paying more than you need for your energy, get thee, and thy latest bill, to a price comparison site.

However, there are some signs that energy companies could finally be subject to more forceful regulation.Ofgem's reviews into energy bills have so far failed to give suppliers any cause for discomfort, but with the government threatening to transfer some of the energy regulator's powers to the Office of Fair Trading, it may yet raise its consumer game.

Ofgem's review of the energy market should conclude in March, which is also when new EU rules will give it the power to ask firms for details of their wholesale trading. Suppliers have long hidden behind their costs when trying to justify price increases and it must be hoped that Ofgem uses its new powers effectively. It's a long shot, but it's a glimmer of hope. On that attempt to end on an upbeat note, I'd like to wish all readers a Merry Christmas and a Happy 2011.