Energy industry regulator Ofgem has stepped up its investigation into how the top UK energy suppliers make their profits

The Office of Gas and Electricity Markets (OFGEM) has hired forensic accountants BDO to scrutinise how the top UK energy suppliers make their profit.

BDO will look at the trading profits, wholesale prices and hedging practices at British Gas, E.ON Energy, EDF Energy, Npower, Scottish & Southern Energy and Scottish Power.

The involvement of BDO follows Ofgem’s key market review, published earlier this year, which found signs that the big six suppliers increased bills when wholesale prices rose faster than when lowering them.

The probe will look for attempts to underestimate retail profits in an effort to justify price rises such as those announced by the big six over recent months.

The investigation by BDO is expected to last four months, with a report expected before the end of the year. Ofgem said it will consider recommendations by BDO before it publishes any findings.

An Ofgem spokesman said: “Ofgem has appointed accountancy firm BDO to give recommendations on how best to improve accounting disclosures by energy suppliers. This follows Ofgem’s review of the retail market earlier this year, which identified the need to improve accounting transparency to give consumers more clarity about how retail prices relate to suppliers’ other costs.”