In his response to Ofgem’s letter calling on the big six suppliers to explain the impact falling wholesale prices will have on bills, Chris Weston urged the regulator to change its Supply Market Indicators (SMIs).
Weston said Ofgem should consider the SMI and the impact it has on consumer confidence.
He highlighted that the latest SMI figures would have put British Gas’ profits at £800 million, “when the reality is that we have just had to issue our second profit warning in six months and analyst’s consensus places us nearer £400 million”.
Weston added that this “misleading impression” needed to be corrected to “prevent further issues arising in the future”.
In relation to the impact of wholesale prices, Weston stated that when making pricing decisions, British Gas takes into account all the costs they face – including transmission, distribution, and government obligation costs – and not just commodity costs.
He added that British Gas’ longer term hedging strategy has meant that “reductions in the wholesales costs have most definitely not translated to increased profits.”