Choice in the gas and electricity market is “a myth” Energywatch warned yesterday.

Allan Asher, chief executive of Energywatch, told MPs it was a myth there was competition in the energy markets.

He told the Commons business and enterprise committee: “There is a myth that there is vigorous price competition between [energy suppliers].

“For the main product they most actively sell – direct debit for dual fuel, gas and electricity – the price difference between the cheapest and most expensive is £30 a year; it’s just a few pence a week.”

He went on to call for an investigation into the lack of competition among the six energy competitors.

“Our evidence is in any particular area… 86 per cent of consumers deal with one or two competitors. The old electricity franchises which form the backbone of markets,” Mr Asher said.

“Typically a supplier will be able to charge a lot more in their old monopoly area and they’ll do a bit of discounting in one or two other markets just to keep their toe in.

“The markets are quite uncompetitive and under any standard competition test, people would say there is alarm.”

He added: “20 suppliers ten years ago shrunk to just six in a comfortable oligopoly who really don’t feel the need innovate or compete.

“And sadly consumers are the losers.”

The regulator Ofgem is now investigating the recent price rises from the six major energy companies.

“At the moment we cannot see evidence of anti-competitive practices,” said Mark Wiltsher, spokesperson for Ofgem.

“But since all the companies upped prices and differential between them are narrowing, we had a duty of care to customers to investigate.”

He added those customers who have never switched from British Gas for their gas and their old local supplier for electricity could save money by changing companies.

“There are no prizes for loyalty. Shop around and get a better deal,” he urged consumers.