ENERGY companies were last night facing a fresh storm of criticism over their prices as pensioners in the region warned it could be a choice of “heating or eating” this winter.

According to energy watchdog Ofgem, gas and electricity suppliers are making £125 a year profit per customer on a standard dual fuel deal – compared to only £15 in June.

The increase in energy companies’ profits follow a spate of big price rises.

The rises – coupled with fears that domestic heating oil could soon top £1 a litre – have prompted fears of a bleak winter for thousands of vulnerable people in the region.

The average dual fuel bill now costs £1,345 and although Ofgem expects profit margins to drop next year, chief executive Alistair Buchanan said it was not the case that customers could be confident that a fully competitive market existed.

Rising wholesale prices have been cited by suppliers for the recent spate of tariff increases.

However, while Ofgem said such prices had risen by 40 per cent to £115 per customer over the past year, it said that a combination of confusing tariffs, poor behaviour from energy suppliers and lack of transparency meant that radical change was still needed in the sector.

This view was last night supported by charities in the region.

Susan Neill, affordable warmth advisor at Age UK Darlington, said that due to the price increases, many of the charity’s customers were worried about how they would afford to pay their gas and electricity this winter.

She added: “They are very confused over all the different tariffs and payment methods the energy companies use.

“Many of our customers do not have access to computers, so they cannot take advantage of the cheaper internet tariffs.

Energy providers do not always inform customers of the cheapest tariffs available.”

Second World War veteran 91-year-old Andrew Taylor, from Richmond, North Yorkshire, said he would struggle to afford his energy bills, if prices continued to rise.

He said: “It’s got to the point where pensioners think, ‘Do I buy food or do I turn the heating on?’.

“If you’re working you can always do a bit of overtime, but when you’re on a set budget, such as a pension, there’s nothing you can do – it’s a sad, sad state of affairs.”

However, energy firms hit back at Ofgem’s claims and said the methods used by the regulator to calculate their profit margins were wrong.

Npower is the region’s biggest energy supplier, with more than 500,000 customers.

Chief executive Volker Beckers said: “Ofgem’s analysis shows energy companies are making just over £9 profit on every £100 we receive getting energy to your doorstep.

“Earlier this year, the industry was making just £1.50 on every £100; and between 2004 and 2009, Ofgem’s own figures show that the energy industry was making a loss on the average customer.

“These are not the figures associated with an industry that is profiteering or uncompetitive.”

Energy Secretary Chris Huhne, who is due to meet energy companies, consumer groups and the regulator on Monday to ensure that households are given help in saving money on their energy bills this winter, welcomed Ofgem’s proposals, which could come into force by next winter. He said: “Both the Government and Ofgem are working to boost transparency in billing and increase competition in the energy market to help keep prices down.”

Ofgem yesterday announced plans for a new simplified standard tariff. Currently, there are more than 400 tariffs available but, in future, suppliers will have to offer a no-frills version featuring just the unit price for energy used and the standing charge.

Ofgem confirmed that for the new simpler bills, it will set the standing charge, while each supplier will only have one no-frills standard tariff per payment method, per fuel.

The regulator hopes this will enable households to tell at a glance whether they can save money by switching supplier or moving to a new deal.

All other, more complex, tariffs must have a specified end date and fixed terms and conditions.

Automatic rollover at the end of the contract will be banned, but there will be no other restrictions.

Consumer groups gave a cautious welcome to the proposals.

Consumer Focus chief executive Mike O’Connor said: “Consumers are faced with a thicket of energy tariffs that can seem designed to confuse all but the most persistent and numerate consumers.

“More than 60 new tariffs have appeared so far this year, despite all the pressure for fewer and simpler tariffs,” he said.

Which? added that the proposals would help remove some of the complexity and confusion in the energy market.

Independent heating oil price comparison website WhichOilSupplier.co.uk yesterday warned customers that a cold winter could see the price of kerosene hit £1 a litre.