Ofgem’s figures are estimates on earnings before tax and interest paid. The figures do not take into account the companies’ financing costs, the interest or the tax they are paying. More generally, the UK needs a healthy energy sector with companies that turn a profit. Profitability and investor confidence is vital at a time when the industry needs to attract a lot of investment, including up to £110bn in new electricity infrastructure between 2013 and 2020.
“The industry has committed to greater transparency with customers and the largest companies publish a full breakdown of their earnings and costs annually in their Consolidated Segmental Statements (CSS). Ofgem has acknowledged that these are a better indicator of earnings before interest and tax because they are based on actual historical data.
“It is important that customers understand the impact that additional costs such as network charges and Government levies have on bills. We need to have an open discussion on energy, ensuring we use clear explanations of profit that cannot be misunderstood.”