Ofgem has called on the Big Six energy suppliers to explain to their customers what impact falling wholesale prices will have on bills, saying the cost of both gas and electricity has been dropping significantly in recent months.

In a letter to the large suppliers, the energy regulator said their failure to engage with consumers on wholesale prices risked undermining public confidence and trust in the market.

Ofgem said that in early June gas prices for next day delivery reached their lowest level since September 2010 and were now around 38 per cent below this time last year.

Prices for electricity reached their lowest level since April 2010 at the beginning of June, and were currently around 23 per cent lower than this time last year.

Ofgem said that "as far as we know", the large suppliers had not explained the price drops to customers.

The regulator said that while there were upward pressures on energy costs from government schemes to support environmental objectives as well as network renewal, the costs of wholesale power and gas "dwarfed" these and made up just under half the total household bill.

Ofgem said forward prices for gas and electricity had also fallen, and were around 16 per cent and 9 per cent lower respectively for the coming winter than last year. The trend had been driven by the mild temperatures across Britain and Europe last winter, leaving gas storage at record levels.

Ofgem chief executive Dermot Nolan said: "The Big Six suppliers tell us that they think the market is competitive, but our research shows that consumer trust is low."