U.K.’s Ofgem Plans Winter Consultation on Energy-Company ProfitsSally Bakewell
U.K. energy regulator Ofgem will consult with stakeholders including consumer groups and the industry on how to make energy-company profits more transparent in winter, a spokesman said.
Ofgem is preparing to publish a consultation document after Parliament’s multi-party Energy and Climate Change Committee in July said the regulator was failing to improve transparency of profits by the so-called Big Six energy companies, which include SSE Plc, Scottish Power Ltd. and RWE AG.
“The select committee has asked us to look again at whether we can make further steps increasing transparency and we have said that we will do that,” Ofgem spokesman Chris Lock said today by phone. “That’s why we will be consulting on that a bit later in the winter.”
SSE Plc today said it will raise household energy prices by an average of 8.2 percent, reigniting a political dispute over energy bills and government intervention. The Conservative-led government is pushing for a more competitive market to reduce prices with legislation giving ministers some powers to make companies switch consumers to cheaper tariffs. The opposition Labour Party has pledged to cap bills until 2017.
“We recognize consumers remain concerned as to whether current profit levels are justified and we acknowledge the Committee’s views on the need for further action,” Ofgem said today its response to the ECCC report. The consultation will include potential improvements to information made publicly available about energy company profits, it said, though won’t be limited to this.
The ECCC said in July the “complex vertically integrated structure of these companies means that working out exactly how their profits are made requires forensic accountants.”
Energy companies have several units to generate, trade and supply energy and when reporting profits include the different arms, making it difficult to understand supply-side profits, according to the report.