Distribution network operators have higher profit margins than any other sector in the UK, and expects operators to register profit margins of more than 50% in 2022.
The union Unite has called on the energy regulator Ofgem to clamp down on the ‘rampant profiteering’ of companies responsible for bringing electricity to UK homes, and is demanding a cap on their profits.
The intervention from the union comes at a time of soaring energy bills and inflation, with millions struggling during the cost of living crisis. Regional electricity distribution network operators (DNOs), raked in £15.8bn in profits last year and paid out £3.6bn in dividends between 2017 and 2021.
With energy companies and DNOs raking in profits, Ofgem has faced criticism in recent weeks and months for failing vulnerable customers and for passing on rises in wholesale gas and electricity prices faster to consumers.
Sharon Graham, the general secretary of Unite, has written a letter to Ofgem, claiming that DNOs have been let off the hook and that it was time for a ‘clear cap’ to be set on their profits’ to help give ‘consumers confidence that their energy bills are fair and not simply a vehicle for profiteering energy network owners’, the Guardian reports.
While the government has rightly sought to curb the profits of North Sea oil and gas producers, albeit in a rather limited manner, DNOs which carry the energy but do not sell it – have not faced much scrutiny, despite raking in record profits.
In her letter, Graham said that the six operators have “been holding the public to ransom for too much and for too long”. Research carried out by the Common Wealth think tank shows that DNOs have higher profit margins than any other sector in the UK, and expects operators to register profit margins of more than 50% in 2022.
Basit Mahmood is editor of Left Foot Forward
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