Very high profits for energy suppliers

Very high profits for energy suppliers

Energy market investigation chief British Gas and others say 1.25% margin will be correct as 'all they do is measure and billing'

The renewable energy providers profit is five times higher than it should be, he said.

Leading the Competition and Markets Authority's two-year investigation into the UK's energy industry, Roger Witcomb claimed that the suppliers' profits are very high given their limited roles in measuring and billing customers.

He told Sunday Telegraph that it is appropriate for suppliers to make only £ 12.50 on a £ 1,000 gas bill, which corresponded to a 1.25% profit margin compared to 7% of British Gas's household procurement business last year.

In fact, what they do - and I will have problems with - measurement and billing.They're not doing anything, ”Witcomb said.

British Gas and other major energy suppliers have claimed that a 5% margin is appropriate, but Witcomb said there was room for further decline in profit if CMA's proposals to improve the market were successful.

Witcomb's analysis was not included in a report released by CMA last month, and this report argued that 30 new measures, including a database, to help rival suppliers reach customers, would cut bills by helping open the market to more competition.

The report suggested that energy suppliers can use customers who are not looking for the best offers to collect prices “financially” above the required level.

However, the watchman decided not to set a limit on the prices that suppliers can charge, except for a temporary limit on prepayment meter fees.