Member Article

Profits at 'Big Six' energy companies lowest since 2009

According to regulator Ofgem, profits at the ‘Big Six’ energy suppliers are at their lowest since the regulator began collecting data in 2009.

Ofgem said that between them, they made £2.8 billion in profit last year, down 20% from £3.5 billion in 2012.

The fall is, according to the regulator, largely due to lower generation profits, because of costs from the closure of previously profitable plants.

Profits also fell in the domestic supply market, providing an average profit margin of 3.9%, while they increased by less in non-domestic supply.

The Ofgem figures show that each customer paid an average bill of £1,225 last year, which, after wholesale and other costs are taken off, works out at around £48 profit per customer, down from £53 profit for suppliers the previous year.

Recent research from YouGov in partnership with provider SSE showed bill-payers believe suppliers make 26% profit - six times more than Ofgem figure.

Ofgem has also announced that new reforms expected to come into effect in the new year will make information on energy companies more accessible.

The rules include a requirement for the companies to have their annual segmental statements independently audited, which will increase consumer and business confidence that profits are being reported accurately.

Companies will also be required to publish their statements no later than four months after their financial year end.

Rachel Fletcher, senior partner for Ofgem’s markets division, said: “With energy prices rising and many struggling to pay their energy bills, there is understandably significant public interest in the profits of the large energy companies, and particularly the profits of their retail businesses.

“Our proposed reforms are providing increased transparency on company profits.

“This is important to inform public debate, encourage competition and to help suppliers rebuild customer trust.”

This was posted in Bdaily's Members' News section by Clare Burnett .