It could be said that power companies are operating a 'stitch-up' especially when the UK's gas and electricity prices are rising at the fastest rate in Europe.

Not so long ago we mentioned the possibility of a 35% rise in energy prices...

Now the energy suppliers are threatening yet another round of price rises that could see bills climb by a total of 46% this year alone!

Now Energywatch, the official consumer body, has gone so far as to accuse power companies of effectively rigging the market against customers.

Energywatch chief executive Allan Asher said the big six power companies are on course to collect £6 billion in what he described as unearned profits in the next few years.

He told MPs the industry is exploiting consumers and using immoral tactics. He also accused the firms of being bloated and inefficient, with the result that as many as 30% of our bills are calculated wrongly.

• Power companies in short supply

Over the last ten years, the number of energy firms in the UK has shrunk from 20 to 6: British Gas, E.on, Npower, EDF, Scottish & Southern Energy and Scottish Power.

These companies not only sell heat and light but are also responsible for producing or importing 80% of all our gas and electricity.

Mr. Asher said this has created a 'comfortable oligopoly' with the result that there is a price gap of only £30 a year between the cheapest and most expensive firm based on a dual fuel contract.

• Penalizing the poor?

Mr. Asher was also highly damming of the fact that some of the poorest people in the UK have to pay much more for heat and light through prepayment meters. The energy suppliers make £1.3billion a year in this way but refuse to help the vast majority of struggling customers.

Mr. Asher said the 5.8 million households who have prepayment meters 'have to pay punitively higher prices' and added: 'Why is it that pre-payment meter customers are paying up to £400 a year more for the identical commodity? This is an immoral premium.'

• Under investigation

Currently, the Commons Business and Enterprise Select Committee are holding an inquiry into the rising energy prices. Mr. Asher said a full-blown Competition Commission inquiry was needed to unravel the secretive power supply contracts that are pushing all our bills through the roof.

He said he was especially alarmed that the power companies are getting fat on profit by tying their gas prices to the spiraling oil prices, which have reached record levels (it is now at $135 a barrel).

Mr. Asher believes this 'toxic' link means that annual bills for heat and light are £400 a year higher than they need to be. He said this means the UK market was 'stitched-up' with the result that prices in Britain are rising faster than anywhere else in Europe. 'It makes a mockery of saying we have a competitive and healthy market,' he declared.

He said the notion that there was competition in the industry was a complete myth, saying;

'There is a lot of pretence of competition, but it doesn't amount to good companies winning and bad companies losing. They really don't feel the need to innovate or compete. Sadly, consumers are the losers. Consumers are getting in the neck.'

So, do energy companies make you feel like you want to punch their lights out?

If you think that power companies are stitching you up, then maybe its time you switched energy supplier?

Use the impartial Energyhelpline comparison site.

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