26th Feb 2015 14:10
LONDON (Alliance News) - UK electricity and gas regulator Ofgem Thursday said energy suppliers will make a 9% profit margin during 2015, slightly lower than an estimate it made last month, and said the average dual fuel bill will also fall during the year as price cuts are introduced.
"Our estimate of the pre-tax margin a typical large supplier could make over the next 12 months, based on a 13-month rolling average margin, is GBP113 or around 9% of the estimated average annual dual fuel bill. This is down GBP1 from the January 2015 estimate," said Ofgem.
The estimates were made as part of Ofgem's Supply Market Indicator report, which is a 12 month forward look at cost trends in the domestic energy market.
In its monthly report, Ofgem said the average dual fuel bill in the UK for 2015 will be around GBP1,301 per year, down from the regulator's estimate of GBP1,305 per year in January.
Ofgem said the new estimate takes into account the price cuts made by energy suppliers to variable tariffs, which saw companies including the "Big Six" suppliers cut costs by up to 5%, as well as the introduction to a number of cheaper fixed tariffs to the market.
The Big Six includes Scottish Power Ltd, part of the Iberdola Group, British Gas, part of Centrica PLC, SSE PLC, EDF Energy, EON and nPower, which have, or are introducing price cuts varying between 1.3% and 5% between February and April.
The regulator also said wholesale gas and electricity prices in 2015 should be around GBP296, or 23% of the average dual fuel bill, which is in line with the estimates made in January, said Ofgem.
However, Ofgem said estimates for company's environmental and social costs has increased by around GBP4 from estimates made a year ago, to GBP93, or 7% of the average dual fuel bill.
Supplier operating costs should remain broadly flat from January estimates, at GBP176, or 14% of the average dual fuel bill, it said.
In aggregate, supplier cost estimates fell by GBP9 per customer bill, per year from estimates made in January, to around GBP1,193 per annual bill.
SSE shares were down 2.1% to 1,552.00 pence per share on Thursday aftyernoon, whilst Centrica shares were down 1.6% to 247.00 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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