Energy firms drop bills but increase profit
Energy companies may well have dropped everyone's bills, but they're going to be making a profit thanks to lower wholesale gas prices. Basically, because they've not lowered our bills by as much as they're saving on wholesale costs, their pre-tax profits over the next year will be up by around 50%, which is £114 profit per household.
Those figures come from energy regulator Ofgem, who are putting pressure on the Big Six to lower our bills even further. Not enough pressure to make them actually do it mind you. They're basically nagging in the hope it'll work in our favour.
"Pre-tax margins of a typical supplier are likely to widen over the next 12 months as wholesale costs continue to fall sharply even when accounting for recent price cut announcements," they said. "If the market were more competitive you would expect suppliers to be competing more vigorously for market share in response to falling wholesale costs."
As previously reported on these pages, Big Six companies have announced their price drops, which land between 1.3% and 5.1% and, crunching the numbers, every knows that the energy providers could've offered much better deals for their customers.
Gillian Guy, chief executive of Citizens Advice, said: "The inadequacy of recent energy price cuts is now clear. Low wholesale costs are allowing energy companies to increase profits whilst barely cutting energy prices. The ball is now back in the energy firms’ court to actually compete with each other on further and deeper price cuts."
The Treasury are already investigating the energy sector, to see whether or not the Big Six are actually passing on savings, which they're clearly not. While one sector gives us small savings, another launches expensive investigations to state the bloody obvious with our taxes.