Energy network Western Power Distribution to make £340m more in profits than previously forecast, Citizens Advice finds
Citizens Advice has today called for energy network companies to pay back excessive profits after Ofgem, the energy regulator, published its latest annual reports on price controls for energy networks.
Citizens Advice’s analysis of the results show that profits for the electricity network Western Power Distribution will be £340m higher than previously forecast by Ofgem over the course of its price control.
Gillian Guy, chief executive at Citizens Advice said:
“Some energy network companies are benefiting from an additional windfall at the expense of customers.
“Our research shows that energy networks are already raking in £7.5bn in unjustified profits. The extra profits revealed yesterday are not a reflection of good performance, so it will be difficult for consumers to understand why they are paying for this through their bills.
“Electricity distribution companies should follow the example of Scottish and Southern Electricity Networks and SGN, and return money to consumers.”
Overall electricity distribution firms’ profits will be £273m higher than originally forecast. Profits are lower than originally forecast for gas distribution (£30m) and gas transmission (£50m), and less than expected in electricity transmission.
Energy networks, as monopolies, have their profits regulated by Ofgem to restrict the amount that consumers pay for through their bills. Earlier this year, Citizens Advice published research finding that companies were on course to make £7.5bn in excessive profits, because of errors in forecasting the companies’ business costs, and the level of risk in the market.
Citizens Advice has called on energy companies to return the excess profits to consumers as a rebate - something which some electricity transmission and gas distribution companies, including Scottish and Southern Electricity Networks and SGN have done. To date, no electricity distribution company has provided a rebate to customers for the current price control.
Notes to editors
Our figures are calculated from data in Ofgem’s RIIO annual reports 2016-17 and 2015-16. The profit figures are derived from Ofgem’s Return on Regulatory Equity, supplemented by the equity share of the Regulatory Asset Value for each energy value, found in the Price Control Financial Models . All figures are shown in 2016-17 prices.
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