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Calls for gas profits probe

A lit gas hob10/2/14

By Charlotte Birch

Energy watchdog Ofgem is being urged to probe the gas profit margins of the Big Six energy firms.

The call has come from Ed Davey, who has put his concerns in a letter to the energy regulator's chief executive, Andrew Wright.

The Energy Secretary claims profit margins for supplying gas are much higher than household electricity supply, with gas accounting for as much as two-thirds of an energy bill.

Companies could be split up

If evidence of a monopoly is confirmed, the outcome of an investigation could see a company being split up.

The Liberal Democrat wrote: "Clearly you will wish to consider whether this is prima facie evidence of an issue in the market and so whether it merits a market investigation.

"Alternatively you may of course conclude that no action is needed or potentially some intermediate measure which can be taken by the sector regulator."

The letter spoke of British Gas, with Mr Davey claiming the largest energy supplier has tended "to charge one of the highest prices over the past three years".

It adds that the company "has been on average the most profitable".

Gas profits investigation welcomed

The latest "significant" step has been welcomed by consumer group Which?

Executive director Richard Lloyd said: "This is a hugely significant intervention by the Secretary of State for Energy.

"This implies that Ed Davey agrees with Which? that the structure of the biggest energy companies is partly to blame for the price hikes that millions of squeezed customers have been struggling with.

"The pressure is now on the regulators to announce next month that they are taking the first steps towards a more radical reform of the energy market.

"And to give consumers confidence that they are paying a fair price."

Gas data already in the public domain

A spokeswoman for British Gas said: "The data referred to in the Secretary of State's letter has already been fully disclosed and in the public domain for a number of months."

She added that the firm will "fully participate" in further discussions arranged with the Office of Fair Trading, Ofgem and the Competition & Markets Authority as part of an ongoing market assessment.

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