Simon Read: The big energy firms should try looking in the mirror - Spend & Save - Money - The Independent

Simon Read: The big energy firms should try looking in the mirror

 

The energy companies and the industry watchdog, Ofgem, have been going at each other hard this week in a spat that would not be out of place in a playground.

The regulator started it by publishing estimated future profit margins for the Big Six energy providers. According to Ofgem, the projected margin before tax for a typical large supplier over the next 12 months will be £106, up from £101.

The regulator also suggested that the energy company profit margin on household bills will be 8 per cent next year – a figure that has almost doubled in just 12 months.

That rightly created outrage, although not just from MPs and consumer groups, who quickly accused the Big Six of profiteering. It also provoked an angry response from the energy companies themselves, which branded Ofgem's figures unhelpful.

Angela Knight, who heads the industry mouthpiece Energy UK, said: "Using estimates as inaccurate as these, and which often result in misconceptions and misunderstandings, gets us nowhere."

Senior officials at British Gas were equally aggressive in their criticism of their figures, as was Dale Vince, the boss of smaller supplier Ecotricity, who said: "Ofgem's figures are utterly misleading. You wonder why it publishes them."

There is a simple answer to that. The watchdog publishes the estimates to give consumers an idea of just how much profit their gas and electricity suppliers are making.

The figures are part of the Supply Market Indicator (SMI), which was set up to help us understand what is likely to happen to the different costs that make up our bills in the next 12 months.

The figures are necessary because the energy companies still hide behind obfuscation rather than being honest and open about why they continue to rake in huge profits while more and more vulnerable people are forced to turn down their heating and suffer because they can't afford to pay the rising bills.

The watchdog accused the companies of not passing on the savings they're making through falling wholesale and environmental costs. Rather than moaning about "misleading" estimates, the companies should answer that key question.

s.read@independent.co.uk

Twitter: @simonnread

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