Gas and electricity Updated:
Energy watchdog Ofgem has released new proposals designed to make the annual statements of energy companies more accessible, clearer and easier to compare. It is hoped that these guidelines will give customers greater confidence in the behind-the-scenes generation of their bills as well as ensure that energy companies are producing accurate, timely statements.
Energy bills are one of the biggest banes of the lives of energy users in the UK, and while household energy bills seem to spiral, so too do the profits of the companies that supply it. As a result, the workings of energy companies are often viewed with suspicion, with profit origins being a particular bone of contention.
Since 2009, Ofgem has required energy companies to produce an annual statement that lays out their revenue, costs and profits in an effort to shed light on the balance sheets of energy companies. However, it now proposes to go one step further and decree that these statements are arranged under a common set of categories in order to make comparison between suppliers easier. These categories are to include wholesale costs, network costs, environmental and social obligation costs, and supplier operating costs.
Another proposal put forward by Ofgem targets the timing of the statements' publication. Currently, energy companies have six months in which to produce their annual statements after year end, however, they will now be required to produce these reports in just four months.
Rachel Fletcher, senior partner for Ofgem's markets divisions, explains: "With energy prices rising and many struggling to pay their energy bills, there is understandably significant public interest in the profits of large energy companies… Our proposed reforms are providing increased transparency on company profits. This is important to inform public debate, encourage competition and to help suppliers rebuild customer trust."
Ofgem hopes that these new proposals will come into force next year.
Energyhelpline, an energy comparison site, has mostly welcomed these proposals, citing the benefits of increased transparency in the annual statements.
"Consumers are understandably concerned at the level of profits the Big Six suppliers are making as they are struggling to afford the sky-high rates they are paying for their energy. Hopefully this transparency will help provide a better insight into what is driving the costs of utility bills, and help increase consumer confidence in the industry, said Mark Todd, director of energyhelpline.
However, he added that the measures again let the National Grid off the hook, with no attempts to include a breakdown of their profits and costs, giving them "an easy ride" in terms of regulation.
While regulation is doing its bit to help keep your energy costs down, there are things that you can do yourself to trim your energy bills.
First and foremost, loyalty to your energy company will not reward you – if you have found your bills creeping up, or you have lost confidence in your supplier, then the best thing you can do is switch. Changing your energy supplier and selecting the most cost-efficient tariff can slim your bills by a surprising amount, so why not get searching? You can start the switching process by getting quotes from our handy comparison tool.
Now that winter is approaching, reviewing the way your household uses energy could also be a money saver. A smart meter can help you do this – it shows you how much energy you use for each appliance, which can help you identify where you can cut costs. You can buy one for your home or ask your supplier if they are running a scheme that provides them for free.
Even if you don't have one of these meters, you can still be energy efficient – the age-old advice of turning off lights and appliances when not in use still rings true.
Whatever you do, it's your responsibility to get the best deal, so do your research well and you could be noticing smaller, more manageable bills in no time.
Compare energy suppliers using our handy comparison tool
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.