Davey queries British Gas profits, mulls break up

Energy Secretary Ed Davey has written to regulator Ofgem and competition authorities questioning the size of profits in supplying gas to UK homes. He also asked them to consider whether […]

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By Vicky Ellis

Energy Secretary Ed Davey has written to regulator Ofgem and competition authorities questioning the size of profits in supplying gas to UK homes.

He also asked them to consider whether British Gas was a “monopoly power” which needed a “break up” to boost competition in the market.

In the letter seen by the BBC he noted the gas market has “little vertical integration”, pointing to analysis that the average profit margin for gas is around three times that of electricity.

He wrote: “For some companies the profit margin is actually more than 5 times the average profit being made on supplying household electricity.”

The Energy Secretary shone a spotlight on British Gas as the company with the largest share of the gas domestic supply market.

He said it has tended to charge “one of the highest prices over the past three years”.

The Lib Dem suggested that if profit margins for gas were brought to a similar level as electricity, the average saving per household each year could be up to £40.

He also said the Big Six suppliers on the whole have been “slow to embrace” energy saving schemes such as the Green Deal.