Energy regulator Ofgem and the Financial Conduct Authority (FCA) began an investigation a year ago but have concluded that there is no evidence of gas market manipulation (Photo: Reuters)
The falling price of wholesale gas is significantly larger than savings passed onto consumerReuters

In spite of a bout of price cuts across the board, the big six energy companies are the ones making profit from the plummeting price of wholesale gas, the industry's watchdog has claimed.

Speaking at the energy climate and change committee, Ofgem's chief executive Dermot Nolan has said that when the monthly supply market indicator report is released on Thursday (29 January), energy providers would post a bigger profit as a result of the dwindling gas prices.

Nolan said: "I do believe it will show an increasing margin and that is clearly a cause for concern."

The monthly report has drawn criticism from suppliers, but Nolan said he was "confident it is a reasonably good forward-looking measure" of profitability in the industry.

Npower, British Gas, E.On, Scottish Power and SSE have all announced in the last fortnight that they will be reducing bills by between 3.5% and 5%. Wholesale gas prices have fallen by 20% since the start of December, 2014.

However, suppliers argue that wholesale gas prices make up just half of an energy bill.

Nolan said that the regulator is fighting for better deals for consumers and he added that now is the time to switch.

Nolan: "What we are trying to do, particularly now, is to focus on switching. We are telling people generally it is a good time to switch."

Recent research from the industry watchdog shows that consumers have the potential to save up to £250 a year if they moved to a fixed deal as opposed to a variable tariff.

Nolan said at the time: "We are seeing companies compete for consumers interested in taking a fixed price deal. However, we are not seeing rigorous competition between suppliers that benefits all consumers.

"Around 60% of customers are on variable tariffs, and the lack of competitive pressure on prices for these customers is another reason why the Competition and Markets Authority is investigating this market."