Supplier profits peak, but energy prices remain high

Soaring profits at some of Britain's largest energy suppliers are provoking widespread criticism, as fuel bills remain high.

Yesterday, Scottish and Southern Energy (SSE), Britain's second largest energy supplier with 9 million customers, revealed its profits had risen to £410.5m for the last six months  - an increase of 36% on the same period in 2008.
Similarly, Centrica, owner of British Gas, now reported that its residential supply business was expecting an increase in profits by 43% this year. This despite a 7% drop in energy demand by its customers in response to the recession, and as a result of better energy efficiency measures.

Suppliers are benefitting from a sharp drop in the wholesale cost of energy, which has shrunk by about half since summer last year. So far, suppliers have not passed on these savings to households, with most bills down by only 4% to 5% so far.

Industry regulator Ofgem documented in September this year that suppliers' margins between wholesale and retail prices had risen for both gas and electricity, to £110 and £80 per customer respectively.

Robert Hammond, energy expert at watchdog Consumer Focus, commented: 'Millions of customers struggling to afford their energy bills will find it difficult to understand how energy firms are making such healthy, and in some cases increasing, profits in the recession.

'There needs to be greater transparency of energy company accounts if consumers are to have confidence that their bills are justified, and are not just lining the pockets of shareholders.

'We also believe there is generally room for further price cuts which should be made now before winter bills hit consumers' doormats.'

Indeed, smaller suppliers have recently started to put pressure on the larger players, by launching the most competitive offers in the market so far. Online deals are now also offering opportunities to save on gas and electricity.

Typically, suppliers adjust most of their prices about twice a year. This is happening now, so it is a good time to compare gas and electricity tariffs, to see if you could get a cheaper energy deal. To compare all UK gas and electricity tariffs and suppliers now, you should click here.