Do energy price rises loom in Spring next year?

The latest Ofgem Quarterly Market Report contains some bad news for consumers with the regulator forecasting a squeeze on suppliers' net margins by Spring 2011.

If this happens as predicted household energy prices could be on the rise.

uSwitch.com urges households to take action now although price hikes are by no means a done deal yet:

The sting in Ofgem's tale: Ofgem estimates that...."by spring 2011 gas purchase costs may increase by 13%. This would shrink the net margin on gas supply from £50 today to around £10. For electricity supply, net margin is also expected to decrease, but at a slower rate."

Thomas Lyon, energy expert at uSwitch.com, says: "At the moment suppliers are still making a healthy margin. But Ofgem's forecast suggests that this may change by Spring 2011. This could herald a price increase for households although it's important to stress that this is by no means a done deal.

"Thankfully this hint of a price increase is still just a dotted line on a graph. But, we would urge households to take the warning on board just in case and ensure they snap up a competitive energy deal and take steps now to control their energy usage as we go into the winter months. Even if Ofgem's prediction turns out to be a red herring, these actions will help consumers to manage their energy bills better so they will have nothing to lose by making a pre-emptive strike.