Energy UK's response to Ofgem's report on profitability
Ofgem have today published a report on the 'profits’ of companies in 2012. They published a similar report on the companies’ 2011 profits.
Energy UK said:
“Ofgem's report sets out the earnings before tax paid for supply side and for generation. The figures do not take into account the costs of the huge investment the energy companies are making, the interest or the tax they are paying. These are not net profit figures.
"Ofgem supports what the companies have been saying. The main reasons customers have seen their household bills go up is because the cost of gas and electricity have gone up as well as other add-ons, such as the social and environmental policies, rising fast.
“Earnings from generation pays for major investment the industry is making. The generation figure of earnings before interest and tax of 20 per cent is not, as Ofgem acknowledges,"a meaningful measure of profitability”. Energy UK is therefore asking Ofgem to use the much more meaningful figures of cost of capital.
“The industry is committed to transparency and openness. We ask others to use clear explanations that cannot be easily misunderstood.”