Official figures released this week have indicated that the big six energy companies are now making an average of £95 profit per duel-fuel household and this figure is likely to increase to more than £100 within another 12 months.
Duel fuel increases
The figures which were estimates from Ofgem have been studied along with new profit figures from British Gas and the other suppliers. These show a profit margin of 24% on average, although it is likely that this has increased since they were released.
Duel fuel prices are now at more than £1400 a year which represents an increase from £1030 (3.2%) since 2011. In addition to these profit figures, the stats have also revealed that many energy suppliers are creating huge profits from their energy creation businesses. This includes the French owed EDF which had a profit margin of 30% and is also asking for subsidies from the government to build nuclear power stations.
Fuel poverty campaigners and the shadow energy secretary Caroline Flint have expressed their outrage at the huge profits and suggest that the system needs complete reform. They are also placing pressure on the government ahead of a select committee on energy and climate change which is due to take place this week.
Sam Robertson from Fuel Poverty has commented that the current reforms are not going far enough and that further calls for the increased use of gas will lead to even higher prices. Meanwhile Caroline Flint has said that the suppliers are claiming that they are only passing on increased costs, however these figures prove that this is not the case. She points out that that they have been able to arrange their businesses however they like and can make huge profits despite the wholesale price increases.
5% profit margin
A spokesperson from Centrica has said that they currently make just £50 per customer and that this is just 5% profit and that this has been their average for the last five years. Meanwhile their wholesale margin was used to fund power stations and therefore needed to be higher.
SSE agree that they cannot use wholesale business to subsidise the retail business. They say this would be detrimental to competition and that they expect to settle at a 5% profit margin over the medium term. They feel this is fair. The boss of SSE Ian Marchant has pointed out that the company can no longer absorb increased wholesale prices.