Domestic customers have had a very poor deal from the deregulated electricity market, MPs have claimed.

The powerful public accounts committee demanded on Tuesday that the energy regulator Ofgem take action and review whether suppliers are acting against competition.

MPs issued a strongly worded report after concluding that electricity prices have fallen, but by much less for households than for industrial and commercial customers.

Wholesale prices have fallen by around 40 per cent since 1998 and reductions for industrial and commercial customers have been consistent with this fall.

Domestic prices have fallen by just three per cent since 2001.

People who have stayed loyal to their energy provider have been hit hardest. The majority of this group are elderly people and those living in rural areas.

The energy watchdog was also urged to issue fines or price caps to firms it believes are acting in an anti-competitive way.MPs criticised the regulator for failing to gain adequate data of the profit margins for the companies it is supposed to oversee.

"So far, domestic electricity consumers have got a very poor deal from the New Electricity Trading Arrangements," said committee chairman Edward Leigh.

"Customer loyalty is penalised and, worst of all, potentially vulnerable groups including the elderly are losing out most.

"Ofgem cannot be sure that suppliers are not lining their own pockets at consumers' expense."