Last week, each of the Big-6 was required, by Ofgem, to publish ‘Consolidated Segmental Reports’ on their UK generation and energy supply operations in the year ending March 2011. This reporting has been happening for a couple of years but, for first time last week, the Reports were published in a consistent fashion – which is useful for those of us who want to compare and contrast.
*In calculating profit margin, I used the stated earnings before interest, tax, depreciation and amortisation (EBITDA) so as to eliminate differences in tax allowances and non-cash accounting procedures between individual companies.
A few quick observations -
The average profit margin on selling electricity to domestic customers is very low - average 1%
The average profity margin on selling electricity to businesses is only 4%
The average profit margin on generating electricity is massive - 38%
There is a significant variation in the 'buying' cost of energy between suppliers (5.78p Edf vs 7.82p Scottish Power) yet the average prices sold to customers has much less variation.
I believe further investigation by the government and OFGEM into the workings of the electricity market is necessary.
