Big Six en­ergy firms’ prof­its fall

Western Daily Press - - Business - JOSIE CLARKE busi­ness@west­erndai­ly­

THE Big Six en­ergy sup­pli­ers have seen prof­its fall for the first time since 2014 as cus­tomers flock to smaller com­peti­tors, but more than half of house­holds re­main on poor-value de­fault deals, the regulator said.

An­nual prof­its of SSE, EDF, Bri­tish Gas, Swin­don-based Npower, E.On and Scot­tish Power dropped by 10 per cent last year to £900 mil­lion as their mar­ket share fell to a new low, Ofgem’s an­nual State of the En­ergy Mar­ket re­port said.

A quar­ter (25 per cent) of en­ergy cus­tomers are now with small and medium-sized sup­pli­ers af­ter switch­ing away from the Big Six, Ofgem fig­ures show.

How­ever, as of April this year, more than half (54 per cent) of house­holds were still on a poor-value de­fault deal com­pared with 57 per cent of house­holds in Oc­to­ber last year.

Ofgem warned that many cus­tomers in vul­ner­a­ble cir­cum­stances, in­clud­ing those on pre­pay­ment me­ters, con­tin­ued to be the most likely to be pay­ing over the odds for their en­ergy.

A sur­vey of more than 70,000 cus­tomers by the regulator found that one in 10 pre­pay­ment cus­tomers “self-dis­con­nected” from their elec- tric­ity or gas sup­ply be­cause they did not top up their me­ters.

Ofgem said it will be launch­ing a call for ev­i­dence next month to find out more about self-dis­con­nec­tion, in­clud­ing whether sup­pli­ers are do­ing enough to help these cus­tomers.

While 41 per cent of re­spon­dents to Ofgem’s lat­est an­nual Con­sumer En­gage­ment Sur­vey said they had en­gaged in the mar­ket to some de­gree, for ex­am­ple by switch­ing, this fell to 32 per cent of those liv­ing in rented so­cial hous­ing and 32 per cent of house­holds us­ing pre­pay­ment me­ters.

The re­port also found that one in ev­ery five cus­tomers (19 per cent) liv­ing in pri­vate rented hous­ing is in fuel poverty, higher than any other type of house­holds and al­most twice the over­all aver­age.

The re­port also shows that aver­age house­hold en­ergy con­sump­tion con­tin­ued its long-term de­cline last year, fall­ing by 5.5 per cent for gas and 3.3 per cent for elec­tric­ity, partly as a re­sult of homes be­ing bet­ter in­su­lated and milder win­ters, al­though Ofgem said it could also be driven by cus­tomers turn­ing off heat­ing and lights to save money.

The Beast from the East in March in­creased heat­ing de­mand across the coun­try to its high­est level since 2010, but elec­tric­ity and gas net­works were re­silient with suf­fi­cient ca­pac­ity to meet de­mand, Ofgem said.

Der­mot Nolan, chief ex­ec­u­tive at Ofgem, said: “We have wit­nessed many pos­i­tive de­vel­op­ments in en­ergy over the last year, but the mar­ket is still not de­liv­er­ing good out­comes for all, es­pe­cially the vul­ner­a­ble.

“Ofgem has in­tro­duced the safe­guard tar­iff which en­sures that five mil­lion house­holds, in­clud­ing some of the most vul­ner­a­ble, pay a fairer price for their en­ergy. Price pro­tec­tion will be ex­tended to a fur­ther 11 mil­lion cus­tomers on the worst deals. We will con­tinue to fa­cil­i­tate the trans­for­ma­tion of the en­ergy mar­ket to en­sure that ben­e­fits are cap­tured for all con­sumers and en­sure no-one is left be­hind.”

En­ergy and Clean Growth Min­is­ter Claire Perry said: “We’re de­ter­mined to pro­tect vul­ner­a­ble con­sumers when it comes to their en­ergy costs. This re­port shows fewer house­holds are on rip-off de­fault tar­iffs as more peo­ple choose to switch sup­pli­ers, sav­ing hun­dreds of pounds on their bills.

“But many cus­tomers, in­clud­ing the el­derly and those on low in­comes, are still pay­ing too much which is why we’re in­tro­duc­ing the en­ergy price cap to pro­tect over 11 mil­lion house­holds from poor value deals this win­ter and fur­ther bring down the £1.4 bil­lion a year that cus­tomers have been over­pay­ing the Big Six.”

Lawrence Slade, chief ex­ec­u­tive of trade as­so­ci­a­tion En­ergy UK, said: “Ofgem’s State of the Mar­ket re­port demon­strates how the en­ergy sec­tor con­tin­ues to tran­si­tion, with in­creas­ing com­pe­ti­tion and en­gage­ment driv­ing ben­e­fits for con­sumers, with switch­ing up, com­plaints down and house­holds spend­ing less on aver­age of their house­hold bud­get on en­ergy than last year.

“It is also wel­come to see cus­tomer sat­is­fac­tion with com­plaints han­dling in­creas­ing and the num­ber of cus­tomers on stan­dard tar­iffs con­tin­u­ing to fall.

“And the in­dus­try is proac­tively tak­ing steps to go fur­ther with a num­ber of vol­un­tary ini­tia­tives to im­prove ser­vice for cus­tomers, in­clud­ing the En­ergy Switch Guar­an­tee which pro­vides cus­tomers with the re­as­sur­ance that switch­ing will be sim­ple, speedy and safe.”

An­nual prof­its at the Big Six firms dropped by 10 per cent last year

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