Forensic accountants in energy price investigation
UK energy industry regulator Ofgem has called in forensic accountants as it steps up its investigation into pricing by the big six suppliers.
The action has been prompted by EDF Energy’s decision to put up its gas prices by 15.4 per cent and electricity prices by 4.5 per cent from 10th November. It is the last of the ‘big six’ to announce price increases for domestic customers. The company says that it had absorbed wholesale price rises before being forced to raise costs to consumers.
The regulator has now decided to see whether higher prices are justified.
Forensic accountants BDO are to investigate whether the energy firms understated their retail profits to justify the higher cost of energy.
Ofgem began investigating the companies last year, and in March it said it had evidence they had pushed up prices in response to rising costs more quickly than they reduced them when costs fell.
The regulator said it had appointed BDO to gain an independent accountant’s view to improve transparency over pricing decisions made by the power companies and give consumers more clarity over how retail prices relate to wholesale energy costs.
An Ofgem statement said: "Ofgem has appointed accountancy firm BDO to provide recommendations on how best to improve accounting disclosures by energy suppliers.
"This follows Ofgem’s review of the retail market earlier this year, which identified the need to improve accounting transparency to give consumers more clarity about how retail prices relate to suppliers other costs."
Vincent de Rivaz, chief executive of EDF Energy, welcomed Ofgem’s decision, saying that "suspicion" of the industry needed to be addressed.
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