Energy companies in profits row.

Price hikes mean energy firms are enjoying bigger profit margins.
Energy companies have been hit by a new storm over prices after it was claimed their average profit per customer had jumped to £125 a year.

Regulator Ofgem's latest price report indicated profits on a standard dual fuel deal had risen from £15 in June following a spate of price hikes in recent weeks.

The average dual fuel bill now costs £1,345 and although Ofgem expects profit margins to drop next year, chief executive Alistair Buchanan said it was "not the case" that customers could be confident that prices are "being set by companies competing in a fully competitive market".

Rising wholesale prices have been cited by suppliers for the recent spate of tariff hikes and while Ofgem said such prices had risen by 40% to £115 per customer over the past year, it added that a combination of confusing tariffs, poor behaviour from energy suppliers and lack of transparency meant that "radical change" was still needed in the sector.

As a first move, a new simplified standard tariff will be introduced. There are more than 400 different tariffs available at present but in future firms will have to offer a no-frills version featuring just the unit price for energy used and the standing charge.

Energy firms hit back at Ofgem's claims and said the methods used by the regulator to calculate their profit margins were wrong.

Perth-based SSE said it "did not recognise in any way" Ofgem's calculation of profits of £125 for a dual fuel domestic customer and estimated the figure for its own customers at £62, and British Gas also said Ofgem was wrong and its methodology "flawed".

Energy Secretary Chris Huhne, who is due to meet energy companies, consumer groups and the regulator on Monday to ensure that households are given help in saving money on their energy bills this winter, welcomed Ofgem's review proposals, which could come into force by next winter.

He said: "Both the Government and Ofgem are working to boost transparency in billing and increase competition in the energy market to help keep prices down."

Consumer Focus chief executive Mike O'Connor said: "Consumers are faced with a thicket of energy tariffs that can seem designed to confuse all but the most persistent and numerate consumers. More than 60 new tariffs have appeared so far this year, despite all the pressure for fewer and simpler tariffs."

Re: Energy companies in profits row.

The energy companies shouldn't be making any profit . The whole concept of 'competition' between them and 'choice' is ridiculous.

Utilities should be none profit making state owned enterprises like they used to be and no one will convince me otherwise.

Re: Energy companies in profits row.

I couldn't agree more Meg.

Re: Energy companies in profits row.

It's out of control now, the energy companies are profiteering, and the government can't do anything about it.

Re: Energy companies in profits row.

There was a debate on sky news this morning about energy prices and what we can do to save money. We all have to change our energy suppliers, and we need to make sure that our houses are well insulated.
This is all he was prepared to say and that was the end of the conversation.
Lots of us dont have spare money in the bank to pay for insulating houses, as much as we would like to.
We will never win with which ever government is in power they always blaim the previous government for whatever is wrong.
a solution might be nice and helpful.

Re: Energy companies in profits row.

I have changed suppliers a number of times and it doesn't seem to make much difference because the tariffs keep changing.
I actually moved suppliers again a month ago and having carefully selected a tariff within two weeks the company had a better one available which would save £40 a year but if I switched even within the same company I would incur a penalty of £20 for switching .
I don't know why all these different tariffs are necessary why can't they just have one.

There is already a discrepancy between what consumers pay in different parts of the country even between adjoining counties . Electricity 'flows' around the country in cables so I don't know why there should be any difference.
It is all a big con

Re: Energy companies in profits row.

Well Cameron's little tête-à-tête with the energy companies did a lot of good didn't it .

Another 'there there dear' moment and the advice to switch suppliers and insulate our lofts, all rather pointless and patronising for those of us who have done this already .

Re: Energy companies in profits row.

Who is to say that energy would be any cheaper if it were still nationalised? Energy production was sold off, like many of the utilities, in the hope that different companies competing for custom would make the products cheaper and more efficient.

OK, it isn't cheap now, but remember that successive governments have taken billions from the privatised companies in the form of licences and taxes, so the benefits of privatisation have been received by all of us in kind over the years.

Another point is that these forms of energy are a finite resource, God's not making any more, so the scarcer it gets then the more it will cost, basic economics....

Re: Energy companies in profits row.

Cameron has not helped at all, took £50 off the heating allowance, and put the VAT up to 20%, he's getting he's pound of flesh.

Re: Energy companies in profits row.

Sometime ago I read that prior to the last General Election the Labour Chancellor had projected a cut in the winter allowance and it was exactly the same as the present regime's cut.
That does not make it anymore palatable or right but a fact nevertheless.

On the issue of VAT, the VAT rate on gas and electricity is still at 5% as it always was.