December 9, 2022

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‘Rampant profiteering’: Unite asks Ofgem to cap power distributors’ profits

2 min read

The companies responsible for bringing electricity to UK homes have been accused of “rampant profiteering” by a leading union that is calling for the energy regulator to cap their earnings.

Sharon Graham, general secretary of Unite, has written to Ofgem to ask it to clamp down on “excessive” profits generated by regional electricity distribution network operators (DNOs), which raked in £15.8bn in profits last year and have paid out £3.6bn in dividends between 2017 and 2021.

In the letter to Ofgem, which has been seen by the Guardian, Graham said the six operators have “been holding the public to ransom for too much and for too long” and called for a recent consultation on the amount they could charge energy suppliers, and ultimately consumers, to be reopened.

Graham wants Ofgem, which has been condemned for its handling of the energy crisis, to revise its policies to tighten the controls on DNOs. “It is time to set a clear cap on profits to help give consumers confidence that their energy bills are fair and not simply a vehicle for profiteering energy network owners,” she said.

Research by Common Wealth, a thinktank, shows that DNOs have higher profit margins than any other sector in the UK, and expects operators to register profit margins of more than 50% in 2022. The thinktank argues that consumers are paying for privatised monopolies to reward their investors.

The government has curbed profits on North Sea oil and gas producers and introduced a levy on “excess returns” made by electricity generators including windfarms and nuclear power plants.

However, the profits of DNOs – which carry the energy but do not sell it – have not been on the political agenda. Their earnings have not been inflated by high wholesale gas prices, but charges to consumers through network costs have been rising.

Ofgem sets price controls on the monopolies’ revenues for five-year periods to ensure that companies run efficient networks and are incentivised to…

Business Matters

2022-11-22 06:18:02

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