The UK’s 6 biggest energy firms which make up the “Big 6” saw record profit for 2016. This is despite wholesale and green costs falling.
The second biggest provider, SSE, managed to raise its pre-tax profit margin three years in a row.
Its dividend payouts have also been on the rise, since 1992. However, they may soon flatline: these rises were funded by disposals, debt or share issuances.
There were losses
Npower and EDF Energy both made losses.
And dual fuel bills across the industry are beginning to come down.
People are switching
The Office of Gas and Electricity Markets (Ofgem), the industry regulator, noted how the energy sector is starting to get slightly more competitive: people are increasingly shopping around for a better deal.
But will the party last?
The energy sector has been impervious to state intervention. It’s managed to defend the status quo against regulatory investigations, parliamentary inquiries and criticism from the political arena. This has allowed the sector to act with impunity, raising prices when it sees fit.
During the election campaign, the prime minister pledged to put a cap on energy bills for 17 million consumers on the worst value tariffs, a policy once proposed by Ed Miliband, the former leader of the Labour Party. Whilst it hasn’t made it onto the government’s legislative agenda yet, it shows that the idea of a cap has growing cross party consensus. And this should be worrying the industry.