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Thursday, January 26, 2023

Energy firms face profit rise probe

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The accounts of UK energy suppliers are to be investigated after profit margins soared 38%

Britain’s energy giants are to be investigated by the industry watchdog after it emerged that recent price hikes have seen suppliers’ profit margins soar by 38%.

Ofgem announced the probe after discovering average margins on a standard dual-fuel tariff had risen to £90, compared with £65 in September.

The latest inquiry comes after three of the “big six” providers – British Gas, Scottish & Southern and Scottish Power – hit households with bill hikes.

Ofgem said it would look at the “facts behind the numbers” as companies claimed rising prices in the wholesale market – where suppliers buy their energy – left them with no choice but to lift bills.

The probe into provider accounts has been welcomed across the board from 10 Downing Street to consumer campaigners, while energy suppliers claimed they had “nothing to hide”.

The inquiry is the latest in a line of investigations by the watchdog, which most recently included a probe into claims npower, Scottish Power, Scottish and Southern Energy and EDF Energy were failing to comply with new obligations to prevent mis-selling.

Announcing the review, Ofgem’s chief executive Alistair Buchanan said: “The energy retail market can only be fully effective if consumers have confidence that the market is transparent and easy to take part in. So we will go beyond our usual quarterly reports on prices and do a comprehensive review of the retail market and our recent reforms from the consumers’ perspective.

“We will also carry out a detailed investigation of the newly available retail accounts and the facts behind these numbers. Greater transparency in the market is good for consumers, investors and for the energy industry as a whole.”

Ofgem said it aimed to finish its investigation by March next year.

The regulator warned in a recent report that rising wholesale prices, boosted by increased demand and the impact of soaring crude oil costs, could be passed on to the consumer.

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