Energy company profits fell 20 per cent in 2013, says Ofgem

Energy company profits slumped 20 per cent last year compared to the year before due to lower generation profitability, according to Ofgem.

The regulator published its analysis of large energy suppliers’ consolidated segmental statements (CSS) for 2013 on Friday, showing that total profits across the big six fell from £3.5 billion in 2012 to £2.8 billion last year.

“Overall, 2013 profits were at their lowest level since the companies started producing the statements in 2009,” a statement from Ofgem said.

The regulator attributed the losses to lower profits in generation due in part to plant closures as well as higher fuel costs.

Although the average dual fuel consumer bill rose from £1,174 in 2012 to £1,225 last year the regulator said that the amount of profit earned per customer fell from £53 to £48 as costs relating to wholesale buying, network use and government policy grew.

Wholesale costs in 2012 were £612 per customer but reached £628 last year, Ofgem’s report shows.

At the same time, ‘other direct costs’ – which include network costs, policy costs, and depreciation and amortisation – grew from £354 per customer to £392 last year.

Ofgem has required the big six to provide data on CSS since 2009 but included a breakdown of direct costs beyond wholesale and operating costs for the first time this year.

In future the regulator says it will require companies to make this data available within four months of the end of the financial year, rather than to a six month deadline, and have the results independently audited.

“Our proposed reforms are providing increased transparency on company profits,” said Ofgem’s senior partner for markets Rachel Fletcher.
“This is important to inform public debate, encourage competition and to help suppliers rebuild public trust,” she added.