UK Energy Prices For 2010:

The UK energy regulator, Ofgem, has warned energy supply companies that households must benefit from a fall in wholesale gas prices.  Ofgem said that if wholesale prices continue to fall, bills must come down in the New Year to avoid the customer losing out. The regulator said companies must not "use investment as a shameful excuse to overcharge consumers". It added that customers can save around £200 a year by switching suppliers. 

That's down to the emergence of new players in the industry providing competition. A further investigation into retail prices will be launched in the New Year, and the regulator says it "will not shy away from proposing radical reform to protect the interests of consumers." Ofgem said that at the moment firms were still recovering from three or four years of losses. 

However it added that profit margins in dual fuel bills are at a five year high and they may rise further. So far, the cost to the customer has been broadly neutral but if wholesale gas prices continue to fall as predicted, then companies will need to reflect that in their bills. 

Separately, Ofgem said average electricity bills can increase by £4.30 a year for five years to pay for network upgrades. The 14 networks that make up the UK supply were built in the 1950s and 1960s and are in need of investment. Ofgem chief executive Alistair Buchanan said the proposals were "tough on inefficiency and poor service but fair in allowing the companies to invest". And he said the new controls would lead to a greener electricity supply. 

There are 14 distribution networks with seven different owners in the UK, Mr Buchanan told the BBC that the customer was paying for the upgrade but that regulators had stopped companies from charging too much. He said Ofgem had cut the sum wanted by companies by 8% to ensure value for money for the consumer. Ofgem said investment on the UK's electricity infrastructure would be up 40% - to £7.2bn - compared to the last five years' spending. 

The new investment figure includes £500m for a low carbon energy fund. The 14, low voltage, distribution networks take electricity from the national grid and pass it to homes and business customers. Before privatisation they were part of the state-owned regional electricity companies. Now the networks are owned by seven separate firms: CE Electric, Central Networks, EDF Energy Networks, Electricity North West, SP Energy Networks, SSE Power Distribution and Western Power Distribution. 

The networks are not electricity suppliers in their own right, so their charges are passed through to customers in the bills the suppliers send out, and make up 16% of those bills. The network distribution costs, unlike overall suppliers' bills, are still formally regulated by Ofgem as the networks are natural monopolies and are not subject to competition.