Energy suppliers have increased their profit margins to £125 per customer a year due to recent price hikes, it has emerged.

Industry regulator Ofgem said that its latest report on prices shows that the average dual fuel bill now stands at £1,345.

Ofgem said the report shows “competition is being stifled by a combination of tariff complexity, poor supplier behaviour and lack of transparency” and radical change is needed.

However, the regulator said that prices are “likely” to fall back next year.

Ofgem’s Chief Executive Alistair Buchanan said: “Ofgem’s tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition. Suppliers have told Ofgem they want to restore the confidence in the industry and now they have the chance to do so.

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“With £200 billion of investment needed to overhaul Britain’s energy industry and the pressure this and rising energy prices puts on bills, consumers rightly demand a major improvement in the way suppliers behave towards them.”

Ofgem is proposing to give consumers a much clearer choice than the 400 tariffs currently available. Each supplier will be required to offer just one standard tariff for each payment type. With the standing charge set by Ofgem suppliers will only be able to change the unit price, which means that consumers will be able to compare prices at a glance.

Ofgem is also developing an Energy Label for every tariff which will give consumers all the important information they need to make an accurate comparison.

(CD/GK)