Energy firms' profit margins soar

http://www.bbc.co.uk/news/business-15302723

The profit margin for energy companies has risen to £125 per customer per year, from £15 in June.
The profit margin figure measures the amount suppliers would make if energy prices and bills were to remain unchanged for the next year.
The energy regulator Ofgem has predicted that profit margins will fall back to about £90 a customer next year.
Ofgem has also confirmed it will force suppliers to simplify tariffs to make it easier to compare prices.

That's one hell of a hike in price.I hadn't realised how bad it had got.

doesn't sound like much ,about 34p profit per day for dual fuel but when you take into concideration the number of customers ,in the case of my supplier npower about 6million that is a massive number even assuming only half the customers have a duel fuel contract .
I wonder if that figure is pre tax or after tax

[Pauls9]

But at the time they said the 18% rise in prices was essential!

Nice to know our extra outgoings are going to a good cause.

[Hom3r]

Originally Posted by Pauls9

But at the time they said the 18% rise in prices was essential!

Nice to know our extra outgoings are going to a good cause.

Yeah its call fat cat bonuses

[gazzae]

Is the margin gross or net?

[STONEISLAND]

What company earns less then £125 per year per customer? Its 34p per day profit just seems a lot due to volume of customers.

I also know they have to invest billions into renewable energy which will cost billions to build the infrastructure; do you think the government is going to pay? Do you think the power companies will pay? No it will come from you and I from the cost of our energy.

Originally Posted by Pauls9

But at the time they said the 18% rise in prices was essential!

Nice to know our extra outgoings are going to a good cause.

The problem is the companies will not allow their profit margins to fall .When faced with rising materials costs most companies will try to absorb the extra cost rather than lose customers to competition ,they try to use the profit margin as a way of keeping retail prices down but with energy companies they are basically a monopoly or cartel with toothless regulation so no such competion exists

---------- Post added at 10:16 ---------- Previous post was at 10:08 ----------

Originally Posted by STONEISLAND

What company earns less then £125 per year per customer? Its 34p per day profit just seems a lot due to volume of customers.

I also know they have to invest billions into renewable energy which will cost billions to build the infrastructure; do you think the government is going to pay? Do you think the power companies will pay? No it will come from you and I from the cost of our energy.

34p per day profit is a huge profit margin given the volume of customers ,in fact if they are net profits they are grotesque .Any investments in renewable energy will be accounted for before the profits are announced and don't forget those investments will usually earn them money as well enough to ofset the initial investment untill it enters a profit

[nomadking]

These figures are not actual profit, but predicted possible profit.

How much profit they make depends on how much customers use, because of things like cold weather. The future weather would be completely unknown to them. If it actually turns out to be warmer, then they would make less profit.

[Mick Fisher]

So much for Privatisation and pseudo competition.

Anyone with half a brain would know where it leads.

We are sooo screwed.

[denphone]

Originally Posted by Mick Fisher

So much for Privatisation and pseudo competition.

Anyone with half a brain would know where it leads.

We are sooo screwed.

Yes l agree totally in that Privatisation was trumpeted as some great policy which would mean lower prices and better services but what have we got now and that is poorer services and sky high prices.

Originally Posted by nomadking

These figures are not actual profit, but predicted possible profit.

How much profit they make depends on how much customers use, because of things like cold weather. The future weather would be completely unknown to them. If it actually turns out to be warmer, then they would make less profit.

The profit figure is a snapshot of the amount suppliers would make from dual-fuel customers if energy prices and bills stay unchanged for the next year

We know that energy prices won't be going down and we know that customers energy usage is fairly consistent so whilst it must be appreciated that the figures are an estimate and will most likely be lower than quoted it is still a massive number and highlights how vulnerable joe public is to profiteering from energy companies

[nomadking]

How would them not being privatised necessarily led to lower prices? The cost of obtaining the fuel, inflation, wage inflation, 'climate change' taxes etc would still be there.

Originally Posted by denphone

Yes l agree totally in that Privatisation was trumpeted as some great policy which would mean lower prices and better services but what have we got now and that is poorer services and sky high prices.

Nothing wrong with privatisation it is the fact that there is no competition .Basically there is a energy monopoly ,we have 5-6 big suppliers who all colaborate when it comes to prices which is why OFGEM need to grow some teeth and start snapping .The government however are in a bit of a pickle over this because they need the tax revenue rom companies such as these to balance the books and reducing their profits reduces the tax revenue

[nomadking]

Originally Posted by martyh

We know that energy prices won't be going down and we know that customers energy usage is fairly consistent so whilst it must be appreciated that the figures are an estimate and will most likely be lower than quoted it is still a massive number and highlights how vulnerable joe public is to profiteering from energy companies

How is customer usage fairly consistent when it varies with the weather? If October turns out to be warmer than normal, customers will use less than normal and yet the companies still have to cover the costs that are not directly related to usage.

Originally Posted by nomadking

How would them not being privatised necessarily led to lower prices? The cost of obtaining the fuel, inflation, wage inflation, 'climate change' taxes etc would still be there.

It may mean lower prices to the consumer but it would mean a much higher tax subsidy from the government if they where still state owned so either way the consumer loses under state ownership ,at least with private ownership the government and tax payer benefit from the tax revenue generated by these companies and if regulated properly there can be strong competition ,it would be even better if the government had a coherent energy policy that goes further than throwing the voters a bone come election time

---------- Post added at 12:26 ---------- Previous post was at 12:18 ----------

Originally Posted by nomadking

How is customer usage fairly consistent when it varies with the weather? If October turns out to be warmer than normal, customers will use less than normal and yet the companies still have to cover the costs that are not directly related to usage.

on a yearly basis and using my own bills as a example i would say they are pretty consistant