Power and gas suppliers have been told by the industry regulator Ofgem they can pass on some of the costs of funding employee pensions to customers,

Ofgem, which sets the prices energy firms can charge for gas and electricity, made the statement as it set out a framework for the future of price controls on monopoly parts of the industry.

Any company can increase its charges to pay for items like pensions if they think the market can stand the increase, this is no different, say analysts, who have widely expected regulators to allow companies to recover these extra costs through mandated price rises.

Energywatch, the consumer watchdog said that they welcomed the move as long as checks and balances were in place to prevent bills for consumers mounting up.

The downturn in stock market investments in recent years has left pension funds of some UK energy firms in deficit to the tune of £4bn and experts argue that some companies could collapse faced with funding such a large gap.

An Ofgem spokesman said the cost of home fuel bills could rise by only “one or two pounds a year."

However, Ann Robinson chair of energywatch said that if fund management has been inept, then the companies should shoulder the burden themselves.

“We look forward to Ofgem taking a long hard look at the pension fund management of those companies seeking deficit recovery from consumers,” she said.

“In cases where a balance of judgement is necessary we would like to see Ofgem err on the side of consumers, not shareholders.”

Only a few days ago a report by the National Audit Office expressed concern that many customers were failing to benefit from price cuts, with two-thirds failing to switch supplier. Increasing prices and charging for pension payments will perhaps encourage more to switch. To check if you could benefit by switching check www.uswitch.com