Energy UK and Profit Transparency
By Anne Lewis-Schneider
Ofgem, the UKís energy regulator has come under question by the Energy and Climate Change Committee (ECCC), and the MPís have said that consumers are being failed because of a lack of transparency, and that steps need to be taken to ensure more openness from the energy regulator in future reports. The MPís have said that communication with consumers need to be more effective to allow customers to see for themselves that the profits being made are not excessive, thus pushing their energy bills higher.
Committee member John Robertson has said that it is of utmost importance that Ofgem are seen to be above board when it comes to the reporting of profits, and that Ofgem needs to be more forceful with energy suppliers to ensure that they maintain a squeaky clean record.
The Committee of MPís have furthermore said that recommendations that were made by specialist accountants hired to analyse these profits, have not been implemented as was requested, to improve on the methods by which companies are required to report their profits. It went on to say that profits made by the six biggest companies that supply energy in the UK, namely E.ON, SSE, British Gas, Scottish Power, Npower and EDF are not overly excessive, although energy costs would appear to be constantly rising. Consumers need reassurance that these rising costs are not due to excessive profits.
Rachel Fletcher, Ofgemís senior partner for markets has said that Ofgem requires all energy companies to produce financial statements yearly. She went on to add that these financial statements have been independently reviewed twice and that the outcome of this review was that these financials are more than fit for the purpose of profit analysis. The Energy and Climate Control Committee has said that forensic accountants would be necessary to work out precisely how companiesí profits are calculated.
UK Energyís Angela Knight has stated that the profits that are made by any particular energy company are not excessive, but smaller household consumers are concerned at the ever increasing cost of their energy bills. The ECCC has emphasised that this is the reason that more transparency is required when profits are reported, to set consumerís minds at ease that they are paying for costs and not for large company profits. It is hoped that clearer and more concise reports will be forthcoming from future Ofgem profit disclosures.
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