Citizens Advice Criticises Ofgem for Allowing ‘Excess Profits’ While Households Struggle

Energy network companies across Great Britain have reportedly gained nearly £4bn in extra profits from household bills over the past four years, according to a new analysis by Citizens Advice. The consumer advocacy group claims that a regulatory miscalculation by Ofgem allowed these companies to overcharge consumers during a period of soaring living costs.

The report alleges that energy firms benefited from an overestimation of borrowing costs by the regulator, resulting in additional charges for customers. While Ofgem assumed rising interest rates would significantly impact network companies, many had secured fixed-rate borrowing terms, shielding them from these increases. As a result, households ended up covering costs that, in reality, the companies did not incur.

Dame Clare Moriarty, chief executive of Citizens Advice, criticised the situation, stating: “Families have faced crippling energy bills, while network companies have made billions in unearned profits.” The report highlights that Ofgem’s current price controls, in effect from 2021 to 2028, have allowed these companies to extract undue profits while many consumers struggle with record-high levels of debt.

The charges consumers pay to network operators, including National Grid, UK Power Networks and Scottish Power, are set by Ofgem through a regulated framework designed to balance cost recovery and profit incentives. However, Citizens Advice argues that the profits earned exceed what should be considered fair, calling on companies to return the money by funding debt relief and targeted energy bill support.

“We’ve raised concerns about these excess profits before, and Ofgem promised stricter measures in future price controls,” Moriarty added. “Clearly, those measures have failed.”

In response, an Ofgem spokesperson downplayed the financial impact on households, stating that the issue equated to “a few pounds per year” on consumer bills. The regulator also noted that adjustments had been made to prevent similar financial overperformance in the future.

An Energy Networks Association spokesperson, representing the industry, dismissed the report as “overly simplistic” and failing to account for the long-term investment cycle. They emphasised that network operators are investing over £100bn between 2021 and 2031 to upgrade the grid and drive economic growth, stressing the need for regulatory stability during this transition.