The regulator has allowed energy network companies to make bigger than expected profits at the expense of household bills, according to its own state of the market report.
The regulator oversees the business plans of regional gas and electricity networks to keep a rein on how much each firms can spend on their infrastructure, and how much they can claim back through energy bills.
Dr Alan Whitehead, the shadow minister for energy and climate change, said: “When it comes to the excess profits of network companies, Ofgem (Office of Gas and Electricity Markets) were asleep at the wheel. Their payment framework forces them to try and predict the future, years in advance, which was easily gamed and exploited by some network companies. Labour would scrap this senseless system by bringing energy networks back into public ownership to be run democratically, for the public good, and without ripping off bill payers.”
Some networks managed to earn a 10% return on their investment, compared with falling profit margins of only 3% for the UK’s largest energy suppliers which are losing customers to a new crop of upstart energy suppliers.
The regulator said a fifth of consumers switched supplier in the last year while the proportion of homes which have never switched more than once has fallen from more than 60% to less than 50%.
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