Business

Ofgem predicts lower profit margins for energy suppliers

  • 28 August 2014
  • From the section Business
Electricity pylons Image copyright PA

Profit margins of large energy suppliers will be lower over the coming year compared with previous estimates, says the regulator Ofgem.

On a typical dual-fuel energy bill of £1,330, suppliers will make a pre-tax margin of £102, or 8%, which is £4 lower than last month's estimate.

In July, Ofgem said supplier margins would double over the next 12 months, from £53 per bill to £106.

The industry itself regards the figures used by the regulator as inaccurate.

Ofgem says actual profit margins will depend on individual company's hedging strategies and cost efficiencies.

Of the total £1,330 dual fuel bill, Ofgem estimates suppliers' wholesale costs will amount to £598, while network, environmental and social costs will make up £386. Operating costs are estimated at £174.

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