UK ENERGY regulator Ofgem yesterday predicted that profit margins of the large suppliers would be lower over the coming year compared with previous estimates.
Only a month ago, the watchdog had forecast that the biggest energy suppliers would double their profit margins over the next year.
Ofgem’s latest supply market indicator report saw it cut its pre-tax margin estimate for large energy suppliers to £102, or eight per cent of an typical annual dual-fuel bill of £1,330, a drop of £4 on last month’s estimate of £106.
Reacting to the latest estimates, Angela Knight, chief executive of industry body Energy UK said: “At last Ofgem has confirmed what we have been repeatedly saying and that is that suppliers make an average margin of about £1 a week per household – and profit is even less. The accurate numbers have been taken from the companies’ audited accounts, so we all know they are right.”
She added: “We call upon Ofgem to only use accurate figures, to stop issuing estimates which are so often misunderstood, misinterpreted and can also be misleading. They need to play their part in explaining to the public what goes into their… bills.”
Some of the UK’s “big six”, representing around 95 per cent of the country’s household electricity and gas supply, reacted angrily to Ofgem’s claim last month that they would double profit margins. They expressed serious doubts over the validity of the methodology used.
British Gas owner Centrica said last month it expected its customers bills would on average be seven per cent lower in 2014 compared to 2013, with profit per household expected to be 20 per cent lower over the year at around £51 before tax – far below Ofgem’s estimate.
Disputes between Ofgem and major energy firms have increased in the lead up to next year’s UK general election, as the opposition Labour party earlier this month said it would give the regulator stronger powers to revoke energy licences if it won office.