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Last Updated: Monday, 7 January 2008, 09:56 GMT
Darling seeks energy cost talks
Alistair Darling
Mr Darling wants to talk with Ofgem about recent price rises
Chancellor Alistair Darling has asked to meet the energy regulator Ofgem to discuss last week's gas and electricity price rises by Npower.

In a letter to Ofgem, Mr Darling said he wanted to review the reasons behind the price rises and their implications.

Npower, which has increased average gas prices by 17.2% and electricity by 12.7%, expects rivals to follow suit.

The company, the UK's fourth-largest energy supplier, blamed the price rises on soaring wholesale costs.

Record oil costs

Wholesale energy prices have risen by 66% for electricity and 60% for gas since last year, said Npower, which has four million UK customers.

Gas rings

In the letter to Ofgem, Mr Darling wrote: "I would be interested in receiving your assessment of gas and electricity supply and market conditions both in the UK and Europe and likely future trends.

"I would be particularly interested in your views on the relationship between wholesale price movements and feed-through to domestic retail prices."

Analysts say wholesale gas prices have risen on the back of the record cost of oil, as any increase in the price of crude has a knock-on effect on gas.

Wholesale gas prices in the UK are also said to have been driven higher by the growing number of energy firms on the continent turning to the more liberalised UK market for cheaper supplies.

Price comparison website uSwitch has agreed with Npower that it is only a matter of time before rivals put up their own prices.

Gas accounts for 40% of electricity production in the UK.

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