Energy companies’ profits could increase to £114 per household over the next year despite cuts to tariffs as wholesale costs fall.
That’s according to the latest supply market indicator (SMI) from Ofgem, which said it had taken the recent price cuts announced by the Big Six companies into account as well as the introduction of a number of cheaper fixed tariffs to the market.
The regulator calculated suppliers will make a £114 pre-tax margin per household in the next 12 months – a £9 rise on its November update.
It said: “Our latest supply market indicator suggests the pre-tax margins of a typical supplier are likely to widen over the next 12 months as wholesale costs continue to fall sharply even when accounting for recent price cut announcements.
“If the market were more competitive you would expect suppliers to be competing more vigorously for market share in response to falling wholesale costs.”
Energy Secretary Ed Davey added customers aren’t going to stick around if they’re not getting a fair deal.
He went on: “People want to see bigger savings on their energy bills – not bigger profits going to the Big Six.”
Earlier today, Energy UK, which represents companies including the Big Six suppliers – British Gas, E.ON, EDF Energy, npower, SSE and ScottishPower – slammed Ofgem’s estimates of suppliers’ profits as “statistically biased and inaccurate”.