Staggering profits of distribution network operators

Sir, – This financial crisis is rooted in energy.

Focusing solely on the energy firms lets another player get away scot-free.

The distribution network operators (DNOs), which control the pipes and cables that supply the energy, were privatised during the end of the Thatcher era.

It is surprising how little attention they have received in this inflation debate given their status as huge monopolies meaning they would earn less profit if broken into competing organisations.

All are recording huge profits several times the average – in fact they are more profitable than any other sector in the economy.

Profit margins for electricity is 49% with 42% for gas. Average households now pay £700 more annually with another price rise due in October.

Forty per cent of UK homes are facing fuel poverty alongside eye-watering profits which are characterised by concentrated market structures where only six companies have a market share of 94% for electricity and one gas operator has 50% of networks.

With tens of millions of households dependent on these companies for electricity and gas, the ultimate owners of these companies are guaranteed big returns on their investments.

The owners are a narrow group of investors with £8 billion handed to shareholders since 2012.

So it is important to underline the key beneficiaries of this current ownership model are giant corporations and the super-rich who can comfortably afford to lose out if this sector was reorganised.

A windfall tax on energy networks could be rapidly introduced to provide muchneeded support for the hardpressed facing the worst drop in living standards for decades.

The UK Government’s current package of relief is far too small and will have to be repaid.

Given the success of publicly owned energy suppliers in Europe, the case for public ownership here is very strong given there are currently many limits on the amount of competition that could be introduced to lower the prices.

This can be best achieved through democratic public ownership of energy as we need to see a transparent and accountable model of public ownership fit for the challenges of the future.

In light of the climate emergency and the need to plan for a fair and rapid transition to a green economy, it is essential these services be governed in the public interest.

Boris and Ofgem must stop dawdling and act now otherwise the PM is going down with his ship and taking some of us with him.

Ian Wallace. Chapman Drive, Carnoustie.