These figures show how the profits of energy companies are set to rise:
- The average margin for a typical, standard tariff dual fuel customer is approximately £50 (£5 higher than Ofgem's previous estimate)
- But it's expected that profit margin will rise to around £70 over the next three months
- It's because bills for some customers are going up
- Bills may also need to rise by 14% to 25% to pay for investment to increase Britain's energy systems by developing more low carbon power stations
Ofgem says the way consumers are being sold energy needs to be re-examined. As suppliers face the prospect of increased profits, Ofgem's Ian Marlee told ITV News they are looking at ways of reforming the market.
System operator National Grid can use a number of ways to control the supply of electricity if there is a spike in demand:
- It can lower the voltage, which means households may notice lights dimming or flickering
- Industrial customers can also be asked to come off the supply to protect households
A survey which compared energy prices in major cities across Europe found London ranked 12th for electricity and 14th for gas.
– Edward Davey MP, Energy Secretary
Security of electricity supply is of critical importance to the health of the economy and the smooth functioning of our daily lives. That is why the Government is reforming the electricity market to deliver secure, clean and affordable electricity.
According to the energy regulator Ofgem:
- The amount of spare capacity on Britain's electricity network is 14%
- That could fall to 4% in 2015/16
- This is because coal-fired power stations are likely to close earlier than expected under EU environmental rules
Millions of households are being warned their energy bills may have to go up even though suppliers face the prospect of increased profits. A report by energy regulator Ofgem warns the closure of power stations will reduce Britain's spare electricity capacity which will put pressure on prices.
The regulator has also revealed energy companies are making more profit from each customer.
The average margin on a dual fuel bill is £50, slightly higher than previous estimates. But Ofgem predicts that margin will rise to around £70 over the next three months because some bills are going up.