The business secretary has urged energy companies to address the ‘lack of
transparency’ in their accounts or face the possibility of opening their books
to reveal the profits of their supply and generation arms.
John Hutton believes that the failure of some big integrated energy companies
to record separately their profits in generation and retail means potential new
entrants to the market do not have the data they need, holding back competition,
the FT reported.
‘My view is that the lack of transparency as to the accounts of our major
energy supply companies is potentially problematic both in terms of the
reputation of the industry itself and in terms of good policy making,’ Hutton
wrote in his letter to Ofgem.
He added further: “I would be particularly interested to hear your views on
the merits of requiring vertically integrated energy companies to report the
accounts of their supply and generation businesses separately.”
Hutton also said that recent big domestic energy price rises announced by
power companies – such as such as Scottish & Southern Energy, Eon UK, RWE
Npower, Scottish Power and EDF Energy – appeared hard to explain when they were
making big profits across their business.
Hutton wrote: ‘During the recent retail price increases by supplier
companies, the lack of transparency around the profitability of their supply and
generation arms has led to confusion in the media and among the wider public…
How can a company which has been making good profits overall be justified in
increasing its retail prices, even with record commodity prices?’
transparency urged for energy companies