Ofgem and big six energy suppliers spar over profit
A fight between the big six energy suppliers and regulator Ofgem kicked off yesterday, due to a wide disparity between their estimates of company profits.
Ofgem will today predict that firms will make £106 per household, up from the £101 it forecast a month ago. But the industry argues that their estimates have been wildly inaccurate.
“In April 2013, Ofgem forecast supplier profit margins of £100 per dual-fuel customer over the following 12 months, and yet our audited accounts for the same period show that in reality we made £48 per dual-fuel customer,” said supplier SSE.
Angela Knight, chief executive of industry body Energy UK, told City PM that Ofgem needed to reform its methodology.
“These inaccurate estimates are not helpful for transparency or customer confidence,” she said.
“We have made this clear that this is not a measure of profit but an indicator showing trends,” said Ofgem, but added that “concerns that savings weren’t being passed on to customers when wholesale prices fall was one of the reasons we have proposed a referral of the energy market to the Competition and Markets Authority for investigation.”
Ofgem said separately that it had set out price controls for network companies, which should lower costs on customers’ bills.