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| Energy firms' gas profit margins questioned by minister | Energy firms' gas profit margins questioned by minister |
| (35 minutes later) | |
| The profit margins made by the "Big Six" energy companies when supplying gas are much higher than previously thought, the energy secretary has said. | The profit margins made by the "Big Six" energy companies when supplying gas are much higher than previously thought, the energy secretary has said. |
| In a letter to regulators seen by the BBC, Ed Davey specifically questions the dominance of British Gas. | In a letter to regulators seen by the BBC, Ed Davey specifically questions the dominance of British Gas. |
| He says its profit margin is one of the industry's highest and, with 41% of the market, it has the largest share. | He says its profit margin is one of the industry's highest and, with 41% of the market, it has the largest share. |
| British Gas said the data had already been fully disclosed and that it would participate in further discussions. | British Gas said the data had already been fully disclosed and that it would participate in further discussions. |
| "There is an ongoing independent market assessment being conducted by the Office of Fair Trading, Ofgem and the Competition & Markets Authority", the company's statement said. | "There is an ongoing independent market assessment being conducted by the Office of Fair Trading, Ofgem and the Competition & Markets Authority", the company's statement said. |
| "We welcome this and have complied with all the requests for data which we have received. | "We welcome this and have complied with all the requests for data which we have received. |
| "The data referred to in the Secretary of State's letter has already been fully disclosed and in the public domain for a number of weeks." | "The data referred to in the Secretary of State's letter has already been fully disclosed and in the public domain for a number of weeks." |
| Mr Davey has asked the competition authorities to investigate the profit margins as part of their ongoing review. | Mr Davey has asked the competition authorities to investigate the profit margins as part of their ongoing review. |
| He asks them to consider all possible remedies "including a break-up of any companies found to have monopoly power to the detriment of the consumer." | |
| The BBC's John Moylan said that the timing was "extraordinary" and that it could trigger a much longer investigation. | The BBC's John Moylan said that the timing was "extraordinary" and that it could trigger a much longer investigation. |
| "There are questions too for the regulator Ofgem," he said. | "There are questions too for the regulator Ofgem," he said. |
| "The figures have been available on the website for months - why hasn't the regulator already acted?". | |
| The cost of energy has been a big debate since Labour leader Ed Miliband pledged to freeze energy prices for 20 months if he was elected. | The cost of energy has been a big debate since Labour leader Ed Miliband pledged to freeze energy prices for 20 months if he was elected. |
| A series of above-inflation price hikes by the major energy suppliers has also sparked consumer anger. | A series of above-inflation price hikes by the major energy suppliers has also sparked consumer anger. |
| Mr Davey said that so far the debate on energy prices had centred mainly on the electricity market, but that gas accounted for two thirds of an energy bill for most households. | Mr Davey said that so far the debate on energy prices had centred mainly on the electricity market, but that gas accounted for two thirds of an energy bill for most households. |
| "Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity," his letter says. | "Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity," his letter says. |
| "There is also evidence that British Gas, the company with the largest share of the gas domestic supply market, has tended to charge one of the highest prices over the past three years, and has been on average the most profitable," he adds. | "There is also evidence that British Gas, the company with the largest share of the gas domestic supply market, has tended to charge one of the highest prices over the past three years, and has been on average the most profitable," he adds. |
| And in an accompanying analysis note he says: "Does this indicate that British Gas has a strong monopoly position which enables it to generate high profit margins?". | And in an accompanying analysis note he says: "Does this indicate that British Gas has a strong monopoly position which enables it to generate high profit margins?". |
| Mr Davey estimates that if margins in gas were similar to electricity, the average saving per household could be up to £40 a year. | Mr Davey estimates that if margins in gas were similar to electricity, the average saving per household could be up to £40 a year. |
| The letter was sent to the energy watchdog Ofgem and the Competition and Markets Authority. | The letter was sent to the energy watchdog Ofgem and the Competition and Markets Authority. |
| Tables accompanying the letters also show that Centrica, which owns British Gas, saw profit margins of 11.2% in 2012 and a 41% share of the gas market. | Tables accompanying the letters also show that Centrica, which owns British Gas, saw profit margins of 11.2% in 2012 and a 41% share of the gas market. |
| SSE also has a high profit margin of 11.4% but a much smaller market share; therefore this was not seen as such a problem. | SSE also has a high profit margin of 11.4% but a much smaller market share; therefore this was not seen as such a problem. |
| Rival EDF made a 4.1% loss on gas in 2012. | Rival EDF made a 4.1% loss on gas in 2012. |
| The analysis compares this with the profit margins of supermarkets which typically range from 3.5% to 5%. | The analysis compares this with the profit margins of supermarkets which typically range from 3.5% to 5%. |
| There has been much discussion and anger in recent months over energy price rises. | There has been much discussion and anger in recent months over energy price rises. |
| Last year, the government changed its pland for a green levy on the industry in order to persuade the major energy companies to reduce the planned increase in bill prices. | Last year, the government changed its pland for a green levy on the industry in order to persuade the major energy companies to reduce the planned increase in bill prices. |
| That followed Labour's pledge to freeze energy prices for 20 months for every home and business if it won the 2015 election. | That followed Labour's pledge to freeze energy prices for 20 months for every home and business if it won the 2015 election. |