'No Justification' For Energy Prices - Report

The big six energy companies are failing to pass on price cuts in full - costing the average household £145 a year - a new report says.

Which? said its research shows a failure to align retail prices with wholesale costs has seen consumers forced to fork out an extra £2.9bn over the last year.

It came as Ofgem, the government department charged with protecting the interests of electricity and gas consumers, was criticised for advising families to save money by making packed lunches or by jogging instead of joining a gym.

According to Which? there was "no justification" to increases in gas and electricity prices in late 2013, based on wholesale costs.

And it argued the recent cuts of up to 5.1% in standard gas tariffs by the so-called 'big six' energy suppliers should have been higher.

The report claimed that if they were aligned with wholesale energy costs, the reductions in gas and electricity prices should have been around 10%.

Which? executive director Richard Lloyd said: "Our analysis places a massive question mark over how suppliers have been setting prices over the last two years.

"They now need to explain to their customers why bills don't fall further in response to dropping wholesale prices.

"While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they'll deliver fair and affordable energy prices in the future."

Ofgem was accused of "adding insult to injury" over its cost-cutting advice to consumers , which also included switching to a second-hand phone and not buying coffee.

Eva Jasiewicz, from Fuel Poverty Action, told Sky News that Ofgem was not protecting the interests of consumers, 68% of whom she said want energy brought back into public control.

"Ofgem are blaming the poor, they should be putting the blame on the big six," she said.

"The big six energy companies have been making massive profits (and) no one's asking the CEOs of these companies to cut down.

"They're giving themselves multimillion-pound pay packets, but they're not passing on the cuts at all in the price of fuel to consumers."

But the watchdog rejected the complaints.

An Ofgem spokesperson told Sky News:'We're only interested in helping energy customers save money.

"There's never been a better time to switch and, as our research shows you can save up to £250, particularly if you want to move from a variable tariff to a fixed one."

Meanwhile, the bosses of five price comparison websites have been grilled by MPs over how much they make from customers seeking to swap providers.

Some admitted they make £30 if a customer chooses to swap supplier - £60 if it involved a dual fuel tariff.