Energy firms to be independently audited
Energy firms will have their accounts independently audited in an effort to improve consumer confidence in the under-fire industry, regulator Ofgem has announced.
According to its latest figures, the major businesses - British Gas, SSE, Scottish Power, E.ON, Npower and EDF - are set to make a £102 profit per household in 2014, compared with £48 in 2013 and just £8 in 2009.
Ofgem said that none of the firms had decided to pass on falling wholesale costs to their customers by reducing tariffs, leaving it concerned about the size of the profits the firms are making and proving it was correct in referring the market to the Competition and Markets Authority for a full investigation earlier this year.
The new rules, expected to come into force in 2015, will see the firms compelled to have their accounts audited independently, and publish their statements no later than four months after the end of the financial year. Changes will also be made to bills so consumers can see exactly what they are being charged for each month.
Rachel Fletcher, senior partner for Ofgem's markets division, said: "With energy prices rising and many struggling to pay their energy bills, there is understandably significant public interest in the profits of the large energy companies, and particularly the profits of their retail businesses.
"Our proposed reforms are providing increased transparency on company profits. This is important to inform public debate, encourage competition and to help suppliers rebuild customer trust."
An analysis of the firms' statements by Ofgem found that total profits in their generation and supply businesses fell from £3.5 billion to £2.8 billion in 2013 – the lowest level since the companies started producing statements in 2009.
A statement from Energy UK said work was already been done to make bills more transparent. "The sector is committed to transparency and will work with Ofgem to make sure the public know what they are paying for in their bills," it said.
"The companies' annual statements are already audited independently and broken down to show the range of costs suppliers are subject to. Energy UK looks forward to hearing Ofgem's further proposals to ease consumers understanding of the sector.
"It is right and proper that companies should be allowed to make a profit when they perform well since it is vital to attract investment."