Energy firms slammed over ‘rocketing’ profits

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ENERGY companies were hit by a new storm over prices yesterday after it was claimed their average profit per customer had jumped to £125 a year.

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 per cent 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 yesterday 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. British Gas also said Ofgem was wrong and its methodology “flawed”.

Comment: Page 16.