Electricity network firms’ profits add £10bn to bills

7th September 2017 | Commercial Energy

The six companies that run the cables bringing electricity to homes and businesses across the country made annual average profit margins of 32 per cent over the last six years, a new analysis concludes.

The equates to about £10bn on the nation’s collective energy bill over six years (2010-2015), or around £27 per home per year. The analysis, from the Energy and Climate Intelligence Unit (ECIU), found that these Distribution Network Operators (DNOs) paid dividends to their shareholders during this time amounting to 15 per cent of turnover – roughly half of the final profit. This equates to almost £1bn (£850m) per year, or roughly £13 on the average domestic bill.

The report is published as the government’s much anticipated review of energy costs, written by Professor Dieter Helm, gets underway.
John Penrose MP said, “This report suggests that Ofgem has been asleep at the wheel while the network operators have been overcharging everyone for years. What’s the point of a regulator that doesn’t stick up for consumers against vested interests, whether it’s the Bis Six energy firms of the firms that own the pipes and wires which get energy and power to our homes?

“We need a heavyweight, cross-sector regulator that isn’t scare to do its job which won’t turn tail and run at the first sign of resistance.”

A recent Citizens Advice report said that the businesses responsible for both the UK’s electricity and gas networks are making £7.5bn in “unjustified profit” over an eight-year period, arguing that the money should be returned to consumers.

Richard Black, director of the ECIU, said the Helm review should look across the entire energy supply chain, including at whether profit margins are fair.

“Britain can be proud it has one of the most reliable power networks in the world; the lights aren’t going out and the network firms can take some of the credit for that. But this doesn’t require that we write blank cheques. And just as profits of the “Big Six” have rightly come under the magnifying glass, the companies operating the power cables deserve scrutiny too, particularly with such large chunks of dividends leaving the UK economy.”

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