Energy giants to earn £118 off each home

Damian Clarkson
utility bill series
utility bill series

Britain's energy giants look set to increase the amount of money they make off us each year, new data from the regulator has shown.

Helped by falling wholesale gas and electricity costs, Ofgem estimates the Big Six will earn £118 before tax from each household over the next year. This is an increase of £5 compared to last month's estimate.

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Each month, the regulator issues its Supply Market Indicator (SMI), which aims to give consumers a better understanding of the latest costs associated with the energy market.

"Our [March] estimate of the pre-tax margin a typical large supplier could make over the next 12 months, based on a 13-month rolling average is £118, or 9%, of the estimated annual dual fuel bill," Ofgem said in a release.

"This is up £5 from February's estimate and can be explained by the fact that prices for the delivery of gas and electricity in the future are lower than they were last month."

Thankfully, the regulator believes that some of the savings from cheaper energy will be passed on to customers, estimating that the average dual fuel bill for the next 12 months from March is £1,295.

"This is £6 lower than last month's estimate and around £60 lower than our estimate a year ago."

'Deficiencies' in Ofgem's calculations

Ofgem stresses that its monthly estimates of a supplier's pre-tax margin is by no means a prediction of a supplier's profits, "which can be affected by a variety of factors, including the way it buys energy for future use, cost efficiency and consumption".

Indeed, some of the energy giants have questioned the regulator's calculations in the past.

In an interview with BBC Radio 4, former Centrica boss Sam Laidlaw last year described it as a "theoretical analysis," adding: "We have been in discussions with Ofgem for a number of years about this methodology, which has its deficiencies and they recognise that it needs to be changed."

Make sure you're on the cheapest tariff

Regardless of who you believe, it's essential you take matters into your own hands when it comes to keeping energy bills down.

Improving your home's energy efficiency and switching to the cheapest energy tariff in your area remain the best ways of achieving this.

Click through the gallery below for great tips on cutting your usage, and take a few minutes to compare energy deals as well.

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