Ofgem has decided to extend the licence condition requiring energy suppliers to publish key financial metrics, including profits, to those with fewer customers.
It has also decided to remove the requirement for obligated suppliers to report financial metrics for their generation activities, but extend the licence condition to suppliers without a generation licence.
Under licence condition 19A of the standard gas and electricity supply licences, relevant suppliers must publish a Consolidated Segmental Statement no more than four months after the end of their financial year.
The licence condition currently applies to suppliers which 250,000 customers in any of the four categories of domestic electricity, domestic gas, non-domestic electricity and non-domestic gas. Suppliers must also hold a generation licence for the requirement to apply.
The accompanying guidance includes a blank table (see below) that suppliers must fill out and publish as part of the statement. The table includes metrics such as revenues, operating costs, operating profits, average fuel costs, and customer numbers, which suppliers must provide for each of their relevant business segments.
The requirement was introduced in 2009 to provide better visibility over the profitability of vertically integrated energy companies’ different business segments and address concerns over these companies cross-subsiding their supply and generation activities.
As vertical integration is no longer typical to suppliers, Ofgem said this requirement only applies to four companies currently – Centrica, EDF, Scottish Power and SSE.
After holding policy and statutory consultations last year, the regulator has now decided to lower the threshold for the licence condition to apply to suppliers with more than 50,000 domestic meter points for either gas or electricity, or more than 10 non-domestic meter points for either gas or electricity. In the case of the latter, the number of meters does not include meters used to supply the company itself, or its affiliates.
Ofgem has decided against including a minimum supply volume threshold to avoid capturing small businesses, although suppliers will be able to apply for an exemption on a case-by-case basis.
The licence condition will additionally be extended to suppliers without a generation licence. However, obligated suppliers will no longer be required to report financial metrics for their generation activities.
Ofgem has decided to remove the requirement for companies’ Consolidated Segmental Statements to be audited, although they will need to be reconciled with their statutory financial accounts and the regulator may require an audit if it believes a statement has not been properly prepared.
The deadline for publishing a statement has also been extended to no later than 10 months after the end of the company’s financial year-end.
The updated licence condition will come into effect on 29 March 2024.