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Energy network Western Power Distribution to make £340m more in profits than previously forecast, Citizens Advice finds

20 December 2017

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

  1. 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.
  2. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  3. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  4. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  5. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  6. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  7. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.