The energy industry has strongly defended its money-making after Ofgem accused the big firms of increasing profits to £125 per customer per year, which The Guardian newspaper equated to a 733% rise.
Responding to Ofgem’s analysis of profit margins, Volker Beckers, CEO of RWE npower, said: “Ofgem’s analysis shows energy companies are making just over £9 profit on every £100 we receive getting energy to your doorstep.”
“Earlier this year, the industry was making just £1.50 on every £100; and between 2004 and 2009 Ofgem’s own figures show that the energy industry was making a loss on the average customer. These are not the figures associated with an industry that is profiteering or uncompetitive.”
Suppliers have reacted badly to Ofgem’s claims, with many questioning the regulator’s figures. Tony Ward, Partner and Head of Power & Utilities at Ernst and Young told ELN he thought the suppliers were unfairly given a bad press.
He said: “We’re hearing energy businesses are making substantially greater margins from their customers but if we’re reflecting on margins of only £10-15 as the starting point. That’s effectively nothing- 800% of nothing is not that much, so yes I think there’s a tendency to vilify the suppliers.”