FT: “The energy secretary Ed Davey has written to regulators criticising British Gas’s dominance of the energy market and suggesting it might have to be broken up.”
“….In his letter, Mr Davey said that so far the debate on energy prices had centred mainly on the electricity market. But for the 85 per cent of households that are connected to the gas grid, he said, two-thirds of their energy was accounted for by gas rather than electricity.
“Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity,” the letter said. “For some companies the profit margin is actually more than five times the average profit being made on supplying household electricity.”
He said there was evidence that British Gas, which has the largest share of the gas supply market, “has tended to charge one of the highest prices over the past three years, and has been on average the most profitable”.
….One insider in the energy department said Mr Davey wanted the regulator to consider the evidence as part of its competition assessment and said the energy secretary was concerned that two companies – British Gas and SSE – seemed to be making double digit margins on gas supply.”
Future Today
