COMMONS

Ofgem announcement: Supply Market Report

22 December 2011

The Energy and Climate Change Committee welcomes Ofgem’s announcement of 19 December that it will increase the frequency of its reports on the relationship between wholesale and retail prices in gas and electricity markets. This was an issue raised by the Committee with Ofgem during its evidence session on 15 November.

In October 2011, the analysis in Ofgem’s Supply Market Reports, previously published quarterly, gave rise to widespread reports that energy company profits had risen 733% from £15 to £125 per household bill. Ofgem stood by its analysis, which had been disputed by the ‘big six’ energy companies, but told the Committee that it provided a snapshot of the margins earned from supplying the average energy customer. Energy companies had argued that the figures did not fully reflect profits because no account was taken of discounted tariffs.

During evidence on 15 November the Committee highlighted that the quarterly reports indicated significant volatility in profit margins without giving a true reflection of the money the big six were making. More frequent publication of the data may allow a more complete picture of profits to be seen and as such, Ofgem’s announcement is welcomed by the Committee.

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