Energy network operators help connect your home to electricity and can move your electricity meter. They also fix power cuts that aren’t caused by a problem inside your home. They are different from energy suppliers, which is the company you pay to use electricity and gas.
Citizens Advice said that during the past four years, it helped nearly 700,000 people in England and Wales struggling to afford their energy bills – but during the same time period, energy network companies pocketed nearly £4bn in excess profits.
According to the charity, five million people currently live in households in debt to their energy supplier.
Ofgem under attack
In its analysis of new Ofgem company performance figures, Citizens Advice said a “misjudgement” by the regulator has allowed energy networks to profit from the high inflation that drove the cost-of-living crisis.
Energy network firms are monopoly companies with no competitors, so people rely on Ofgem to set fair network charges through ‘price control’ regulation. These charges are then added to people’s bills.
How life insurance can benefit your health and wellbeing over the decades
Sponsored by Post Office
Citizens Advice says a flaw in the current price control, which it warned the regulator about in 2020, has rewarded companies with billions in undeserved profits, instead of getting customers a fair deal. It said these profits are over and above what Ofgem believes is reasonable.
Calls for more support
With average bills now more than two-thirds higher than they were in 2021, the charity wants network companies to use the money to support those struggling with rising costs, through targeted energy bill support and debt write-off schemes.
Citizens Advice said network companies benefitted from borrowing costs being overestimated in the current price control, due to high inflation. This has boosted company balance sheets, dropping a near-£4bn windfall into their laps.
But while network companies have enjoyed this windfall, household budgets have been decimated by high inflation and soaring energy costs.
Bills are expected to rise again from April and remain historically high for years to come. The total energy debt households owe suppliers has reached a record £3.8bn – around the same as the windfall made by network companies.
Clare Moriarty, chief executive of Citizens Advice, said: “We now know that while households have struggled with sky-high energy bills, network companies have been making astronomical profits.
“We’ve called out the billions of pounds of excess profits made by these companies before, and Ofgem said it would get tougher in subsequent price controls. The measures it put in place have clearly failed.
“Networks should now do the right thing and give this money to those billpayers still struggling, by funding much-needed debt relief and targeted energy bill support.”
