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Wednesday, May 22, 2024

Rising energy profits to be probed

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

The accounts of UK energy suppliers are to be investigated after the industry watchdog discovered profit margins soared 38% in the wake of consumer price hikes.

Ofgem said the average margin on a standard dual-fuel tariff had risen from £65 to £90 since September and it wants to ensure providers are not boosting profits at the expense of the consumer.

The move comes shortly after major companies including British Gas, Scottish & Southern and Scottish Power hit households with price 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.

Energy firms have claimed wholesale gas prices have risen more than 25% since the spring.

Alistair Buchanan, Ofgem’s chief executive, said he wanted to make sure firms were “playing it straight” with customers.

He 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.”

Mr Buchanan added that as Britain was facing a bill of £200 billion to invest in updating the energy network over the next 10 years, consumers had the right to expect the energy retail market to provide value for money.

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