The Big Six Energy Suppliers are in trouble once again and this time they are accused of misleading their customers. By doing so they have generated seven times more profit than what they declared this year. According to a report made by Energy UK, many of the companies are earning up to 24% profit, which is contrary to 3.3%, which they had declared earlier this year.
As per the report by popular newspaper The Sun, this year the average cost of offering fuel to a UK household equals to £844. However, many customers opt for standard variable tariff and spend nearly £1,172 a year. As per this calculation, the profit margin would be equal to £272 or 24 per cent. Convinced by the report, Energy Secretary Greg Clark has officially summoned Energy UK for a meeting.
He stated to The Sun that ‘This report appears to confirm my concern that the big energy firms are punishing their customer’s loyalty rather than respecting it. Customers who are loyal to their energy supplier should be treated well, not taken for a ride. They must treat customers properly — or be made to.’
This is more important in the wake of the fact that energy suppliers had told investigators at the CMA in June this year that they are making a profit of just 3.3% which nearly equals £37. According to them, the main reason for the customers suffering from heavy bills is their inability to shop around and their habit of sticking to the standard tariff. As per the suppliers, this results in a total wastage of £1.7billion a year.
However, the suppliers are now blamed for selectively ignoring the profits part mentioned in the report published by top accountancy firm PwC.
According to The Sun, the calculations were based on the figures by the energy industry and profit margins of the standard tariffs of the suppliers. This was questioned by the spokesperson from Energy UK claiming that the newspaper had wrongly understood the publicly available data to form a report. It said that the data was suggesting how different parameters like wholesale, operational costs, network and policy are used to form an average energy bill.
As per their version, the report was based on the data provided to Ofgem and showed profits of 4% and it was just to suggest that how different pressures on energy bills have changed it in the past couple of years.
Whatever may be the case, things would be clear when the Energy Secretary meets the Energy UK representatives. Nonetheless, this entire episode is an eye opener and suggests how the normal public can be fooled by the best energy suppliers. This makes it all the more important to shop around and switch to suppliers that offer tariffs at lower rates. Above all, shopping around and energy switching will break the monotony set by some of the big energy suppliers over the years. This is much required in the present time when energy bills forms a big part of our monthly budget.
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