Higher than expected profits by the UK’s biggest energy companies will trigger an investigation by authorities, according to energy secretary Ed Davey.
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Higher than expected profits by the UK’s biggest energy companies should trigger an investigation by authorities, according to energy secretary Ed Davey.
The ‘Big Six’ gas firms are making profits up to five times higher than those created by electricity providers, Mr Davey told regulators in a letter delivered on Monday.
He added that evidence suggested British Gas is using its dominance in the market to increase margins.
He called for an investigation into price-setting and even hinted that British Gas could be broken up, in a bid to ease its control on the market.
Utilities bills have become a major headache for small business owners.
Recent research shows that paying for things like business rates, gas and electricity bills ranked higher than the economy or late payment in the list of things keeping them up at night.
In a letter to the energy regulator, Mr Davey wrote: “For the 85 per cent of households who are connected to the gas grid, two thirds of their energy bill is accounted for by gas rather than electricity.
“Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity.
“For some companies the profit margin is actually more than five times the average profit being made on supplying household electricity.”