Household energy suppliers could rack up profits of £1.74 billion over the next 12 months from all of our energy bills. That’s the findings of a new report from the Warm This Winter coalition and Future Energy Associates – Tariff Watch.

supplier profits have increased significantly over the last year. In Q1 2023, this was up to £130 annually for the average household electric bill, versus £27 in Q2 2017. These profits have now started to decline and were at £60 at the start of Q3 2023.

With energy bills predicted to remain at similar levels and 29 million households currently on the standard variable tariff, the combined profit energy firms could make in the next 12 months is £1.74 billion. – Tariff Watch

A breakdown of the different DNO (Distribution Network Operator) regions.

The price of a standard energy bill consists of two components: the standing charge and the unit rate. The standing cost is designed to represent the daily cost to connect to the electricity or gas grid, and the unit rate is the cost per unit of electricity or gas consumed. The price cap sets limits on both the standing and unit charge, which can vary by region, payment type, and is different between electricity and gas.

Between January and July, the standing charge of both electricity and gas increased, by 10% for electricity and by 13% for gas. If the July and January median standing charges for both electricity and gas are accumulated over a year and compared, the July tariff is more expensive by £32 annually. The main cost reductions have come from decreasing unit charges. Tariff Watch

Regional Inequality is perpetuated by our energy system. The report found that Manweb is the most expensive region for electricity by far, costing £1,112 per year, whereas the cheapest region is East Midlands, which costs £1,028 annually. This range of £84 is 8% of the average annual electricity cost across all GB tariffs of £1,059. Manweb’s electricity costs are significantly higher than the next most expensive electricity region, Scottish Hydro. High costs of electricity to households in the North of Scotland, Merseyside, North Wales, and the South-West of England are driven by high electricity distribution charges.

Warm This Winter state: “Britain’s energy system is broken. Without fundamental overhaul of the energy grid and energy tariffs, households will continue to lose out while suppliers will profit.”

In a survey the charity Independent Age found that in Scotland, over half (54%) of over 65s on a low income are worried about how they will afford the cost of heating their home. The Orkney News will publish a future article on Pensioner Poverty in Scotland.

Fiona Grahame