Energy companies see profits soar over three years

An Ofgem investigation has found that energy firms have seen a significant increase in profits over the last three years.

The profit margin has increased by £125 per customer, per year on the standard tariff.

Energy suppliers are now making eight times more profit from customers than they were in June.  Since June, this has increased by £15.

Energy regulator Ofgem confirmed that it would force companies to simplify their tariffs to make it easier for consumers to compare prices.

Simpler tariffs, clearer bills and annual statements are to be proposed in the near future.

The average annual dual fuel bill now stands at £1,345. Struggling UK households are being hard pushed to cover the costs of gas and electricity this winter. The energy regulator predicts that profits are likely to fall for suppliers to around £90 per customer next year.

Ofgem rules that competition is being stifled by a combination of bad customer service, complex tariffs and a lack of transparency.

Radical Reform

They claim that a ëradical reformí of the energy industry is needed and are calling for a ëno frills tariffí.

Ofgemís Chief Executive Alistair Buchanan said; ìWhen consumers face energy bills at around £1,345 they must have complete confidence that this price is set by companies competing in a fully competitive market. At the moment that is not the case.

ìThat is why a radical break with the past is needed. Ofgemís tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition. Suppliers have told Ofgem they want to restore confidence in the industry and now they have the chance to do so.î

Simpler tariffs will mean that each supplier can have only one standard tariff per payment method, per fuel. Automatic roll over at the end of a contract will be banned and there must be a specific end date with fixed terms and conditions for the consumer.

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