Energy regulator boss faces MPs

The man charged with regulating the energy industry will answer to MPs later today after it emerged profits of Britain's "Big Six" energy suppliers multiplied five-fold to more than £1 billion since 2009.

Latest ITV News reports

Ofgem boss 'understands anger' over energy firms

Ofgem boss Andrew Wright has acknowledged a "deep distrust" of energy companies among consumers and said he "completely understands" frustration and anger about rising bills.

The energy regulator's chief executive told the Commons Energy and Climate Change Committee that consumers were not convinced that price increases were either fair or justified.

Ofgem's chief executive, Andrew Wright. Credit: ITV News

He said: "I completely understand why people feel frustrated and angry about rising energy bills. Prices have more than doubled over the last 10 years at a time when incomes have been squeezed, and consumers are not convinced that price increases that they see are either fair or justified."

Read: Energy regulator boss faces MPs

Fuel poverty protest over 'excess winter deaths'

Three anti-austerity groups will take to the streets of London to protest the soaring rise in energy bills caused by what they call "profit-hungry" power companies.

UK Uncut
UK Uncut will be one of the protest groups attending the march against energy rises. Credit: PA

A number of groups, including UK Uncut, Fuel Poverty Action and Disabled People Against Cuts, will join forces to stage demonstrations in areas including central London, Oxford, Lewes and Bristol.

James Grainger of Fuel Poverty Action said: "Energy is a basic need, too important to be left in the hands of profit-hungry private companies.

"The protests will be held to coincide with new official figures on so-called excess winter deaths.

There were 24,000 excess deaths during last year's winter.

Advertisement

Increase in bills behind 'rising profit margins'

There has been "some evidence" of a profit rise for the Big Six caused by higher bills for consumers, the energy regulator said.

However, bill increases in 2012 were caused by a rise in wholesale prices, a report from Ofgem found.

According to the report:

  • There was "some evidence of rising profit margins" - attributed to higher gas and electricity prices, rather than lower costs.
  • Prices on the wholesale market rose by 14%, causing the rise in household bills.
  • Increases in the cost of transmission, distribution and payments to Government, up a combined 20%, were added onto bills.
  • A rise in profits in 2011/12 was partly caused by higher gas consumption during two winters which were colder than average, compared to 2011, which was warmer.

Read more: In numbers: Profits of energy 'Big Six' energy firms revealed

Read more: How much money are the energy companies really making?

Energy regulator to answer to MPs over price rises

The man charged with regulating the energy industry will answer to MPs later today after it emerged profits of Britain's "Big Six" energy suppliers multiplied five-fold to more than £1 billion since 2009.

Pylons
Andrew Wright will appear before MPs to explain the hike in prices despite the Big Six's cashflow rise. Credit: Reuters

Ofgem chief executive Andrew Wright is giving evidence to the Commons Energy and Climate Change Committee at 9:30am.

Data released by Ofgem yesterday, show the combined underlying earnings - before interest payments or tax - of the Big Six of £1.19 billion in 2012, a rise of £221 million in 2009.

British Gas, E.ON, EDF, npower, ScottishPower and SSE blamed rising wholesale energy prices, higher distribution costs and Government green levies for the increases.

Read more: Profits of energy firms revealed

Ofgem 'does not take investment costs into account'

Energy UK, which represents the energy industry, said Ofgem's figures did not take into account the costs of "huge investment" being made by the "Big Six" firms.

It claimed the energy regulator had also used profits calculated before interest payments and tax were deducted.

The main reasons customers have seen their household bills go up is because the cost of gas and electricity have gone up as well as other add-ons, such as the social and environmental policies, rising fast.

– Statement from Energy UK

Govt: Profits 'are a matter for energy firms to justify'

The Department of Energy and Climate Change said it is up to the energy companies to justify their profits.

An electricity meter.
Ofgem said the 'Big Six' energy firms made an average 20% profit on energy generation. Credit: Jens Buettner/DPA/Press Association Images

A departmental spokesman said: "Profits are a matter for energy companies to justify to their customers and shareholders, but profits are needed if they are to continue to invest in Britain's energy security and infrastructure".

Read: ITV News business editor Laura Kuenssberg's blog on how much money the energy companies are really making

Advertisement

Labour: Cameron 'too weak' to stand up to energy firms

Shadow energy secretary Caroline Flint said Ofgem's report shows the Prime Minister "is too weak to stand up to the energy companies and just stands for a privileged few".

General view of electricity pylons near Lydd, Kent.
The Ofgem report claims the 'Big Six' energy firms had an average profit margin of 20%. Credit: Gareth Fuller/PA Wire

Ms Flint said, “However you look at it, there’s no hiding the fact that on David Cameron’s watch the energy companies have increased their profits on the back of spiralling bills for hard-pressed consumers.

Read: Profit of energy firms revealed

npower: Ofgem's report is 'already out of date'

Energy supplier RWE npower said Ofgem's report into its profits was "already out of date".

The energy supplier said in a statement: "RWE’s power stations in the UK made a loss of £51 million, a far cry from a 20% profit margin.

Npower electricity bills.
RWE npower said it made a profit margin 'of just 3p in the pound' from supplying homes and businesses. Credit: Andy Hepburn/PA Wire

"For supplying Britain’s homes and businesses with electricity and gas, npower made a profit margin of just 3p in the pound”.

Read: Business editor Laura Kuenssberg's blog on how much the energy companies are really making

In numbers: Profits of 'big six' energy firms revealed

The "big six" energy firms made an average profit margin of 20 per cent for energy generation in their last financial year, according to figures released by energy regulator Ofgem.

The results are likely to fuel further anger over rising gas and electricity bills.

The key figures included:

  • Profits in the domestic supply business increased by 75 per cent
  • Companies made on average £53 per customer each year
  • Average profit margins increased from 2.8 per cent to 4.3 per cent in 2012
  • The big six made an average profit margin of 20 per cent for energy generation in the last financial year

Read: How much money are the energy companies really making?

Load more updates