8 December 2009 | Jake Kanter

Utility companies must pass on lower wholesale prices to business customers next year, UK energy regulator Ofgem has said.

In its quarterly price report, the regulator said wholesale energy prices had fallen in 2009, driving up margins for large utility firms to a five–year high.

The cost of buying wholesale gas has fallen by an average of £60 per customer bill over the past six months. Ofgem said if costs continue to decline as it predicts, and retail prices remain unchanged, customers will lose out.

A spokesman for the regulator told SM this is likely to have an impact on small and medium-sized businesses, as well as UK households.

Alistair Buchanan, Ofgem’s chief executive, said: “At the moment, the effect of companies smoothing prices has been neutral on consumers, but if prices stay unchanged in the new year, then we will see customers losing out.”

He argued investment in new energy sources should not be used as a “shameful excuse to overcharge consumers”, adding that Ofgem will “not shy away from proposing radical reform” to protect consumers as part of a review of energy prices next year.