Ofgem review seeks to tackle suspicions of energy firm profiteering

Ofgem is consulting on how to make energy company profit information clearer to a “suspicious” public.

The regulator wants firms to publish their annual statements sooner after the year end, having completed a full financial audit.

It is considering options such as requiring companies to publish more information about their trading activities, estimate their return on capital employed (as a “more meaningful measure of profitability for generation businesses” than return on revenue) and review the way they allocate revenues and costs between generation and supply businesses.

Ofgem is also inviting views on how it could improve its own annual review of energy company statements.

Explaining the reasons for the review, the consultation summary said: “For the third year in a row, consumers are facing large increases in their electricity and gas bills. Energy suppliers have blamed increases in costs as the cause of these price rises and have rejected claims of profiteering. Understandably, consumers are suspicious about these explanations and are looking for independent verification of whether or not these price increases are fair.”

However, it noted there can be costs to increasing transparency and said interventions must be “proportionate” and not reveal commercially sensitive information that could impede competition.

The document said: “This is not about publishing ever more information. It is about providing robust and meaningful information in a way that can be clearly understood.”