Ofgem, the energy markets regulator, has told the Chancellor there is no evidence that energy companies are colluding to force up prices to consumers.

The regulator held talks with Alistair Darling as EdF informed its five million customers yesterday that they would pay more for gas and electricity.

In total, more than nine million customers with npower and EdF have been hit with gas and electricity price rises this month, adding around £100 to average annual bills. The UK’s other major suppliers, such as British Gas, are expected to follow their lead and put up bills soon.

Soaring prices have led the independent energy watchdog, Energywatch, to call for the UK’s main energy suppliers to be referred to the Competition Commission to assess any “structural failings” in the market.

There has been particular concern over regular meetings between the "big six" energy suppliers, from which smaller independent suppliers are understood to be excluded.

However, Alistair Buchanan, Ofgem's chief executive, who together with chairman Sir John Mogg met the Chancellor yesterday to discuss the market, said he had found no evidence of any anti-competitive behaviour between the companies.

Ofgem said that bills were being driven up by rising global costs of oil, coal and gas, the cost of curbing climate change, increased investment in the energy networks to ensure safe and reliable supplies for customers and a lack of market liberalisation in the rest of Europe.

Mr Buchanan said: “Ofgem wants to reassure customers that we constantly monitor the competitive market and regularly publish our analysis.

"Obviously, we look even closer during periods when prices are rising, but we have no evidence of any anti-competitive behaviour. We see companies gaining and losing significant market share, record switching levels and innovative deals.”

The energy markets regulator told the Chancellor that the slow progress towards an open energy market in the rest of the EU was also increasing pressure on prices in Britain.

"We are feeling the effect of an opaque, non-liberalised market in the rest of the EU,” Mr Buchanan said.

Ofgem is putting pressure on energy suppliers to find better strategies of easing the burden of higher bills for fuel-poor households – those who spend more than 10 per cent of their income on energy.

The regulator has identified a £9 billion windfall to the energy industry from the free allocation of tradeable emission permits. In line with the EU Emissions Trading Scheme, large-scale producers of power are given a certain number of tradeable permits "free".

Ofgem recognises the value of these permits as £9 billion to the producers and wants them to use that benefit to help their poorest customers.

"This windfall is nothing to do with collusion or anti-competitive behaviour, but stems from the free emission permits given to companies. That is why Ofgem is renewing its proposal that this windfall could be used to help customers in fuel poverty, who have been hardest hit by the recent energy price rises," Mr Buchanan said.

Other countries have been looking at how best to use this windfall and the Spanish Government has also asked energy companies to use it to help poor customers.

Following recent allegations in the press of collusion between energy suppliers, the regulator has asked to see evidence of any anti-competitive activity. Ofgem has powers to investigate and can impose penalties of up to 10 per cent of a company’s global turnover if collusion is proven.

“Ofgem has a proven track record of using its competition powers. We have conducted an exhaustive investigation into gas prices which looked at the onshore and offshore gas markets. Ofgem will act on any evidence of market rigging,” the energy regulator said.

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