Ofgem, the energy watchdog, is launching a renewed transparency drive around the finances of the big six energy suppliers amid further concerns of profiteering.
Figures released by Ofgem show that the companies that dominate power generation and supply made combined earnings before interest and tax of almost £17bn over the last five years.
The regulator is demanding independent auditing of annual accounts – broken down into individual divisions – alongside the faster release of figures and more details on corporate cost structures.
Senior Ofgem officials said they could not dictate energy tariffs but expressed concern that a slump in wholesale gas and electricity prices over the summer was not being passed on.
“What we are not seeing is any reduction in the standard tariff ... yet again that raises the question about whether there is competition in the market,” said Rachel Fletcher, senior partner at Ofgem’s market division.
Fletcher added that this reinforced the reason why the watchdog had referred the big six companies – E.ON, Npower, Scottish Power, SSE, Centrica and EDF – to the Competition and Markets Authority.
Ofgem noted that annual profits per customer had risen from £8 in 2009 to £48 in 2013, slightly down on the year before. But the regulator’s own wider “supply market indicator”, which calculates per-customer earnings on a rolling annual basis, predicts the big six companies are still on track to earn £102 per customer over the next 12 months.
Fletcher denied the regulator was unable to influence company behaviour saying it acted robustly with its call for an investigation by the CMA and believed its latest initiatives would also help.
“Our proposed reforms are providing increased transparency and company profits. This is to inform public debate, encourage competition and to help suppliers rebuild customer trust.”
Ofgem’s latest review of 2013 accounts from the big six show profits from generation and supply reaching £2.8bn in 2013, falling from £3.5bn in 2012 partly because companies have been closing plants.
Some companies are making much more than others with Centrica, the owner of British Gas, securing profit margins from its gas supply business of just under 9%, double that of SSE in second place.
Ofgem has been asking for detailed information on how the big six buy and sell energy in the UK, but the regulator it failed to obtain full disclosure on E.ON, RWE and EDF, which are all foreign-owned.
