Feb 10 Britain's Energy Secretary Ed Davey has
written to regulators saying profit margins of big energy
companies' gas supply units are too high, and suggesting
dominant player British Gas may have to be broken up, the
Financial Times reported late Sunday.
In a letter to energy regulator Ofgem and the Competition &
Markets Authority (CMA), Davey said Centrica-owned
British Gas charged the highest prices in the domestic energy
market and had been the most profitable, the FT said. ()
Davey's letter said Ofgem should decide whether the issue
merited a market investigation on the matter, the FT reported,
and offered possible solutions "including a break-up of any
companies found to have monopoly power to the detriment of the
The news comes amid an independent competition review into
Britain's energy sector launched in October by Britain's Office
of Fair Trading, Ofgem and the CMA, which are looking into
prices, profits and barriers to entry.
The FT, citing a source, said, Davey wanted the regulators
to consider the evidence as part of its competition assessment.
The source added that the energy secretary was concerned that
British Gas and SSE in particular seemed to be making
double digit margins on gas supply.
Soaring energy costs have become a big political issue in
Britain since Labour leader Ed Miliband said in September he
would freeze consumer bills for 20 months if he wins power.
The letter said the debate on energy prices had so far
centred mainly on the electricity market, but that an analysis
of energy companies' profit margins showed that the average
margin for gas is about three times that of electricity, the FT
"For some companies the profit margin is actually more than
five times the average profit being made on supplying household
The paper said tables accompanying the energy secretary's
letter showed that Centrica had reported profit margins of 11.2
percent in 2012 and had a 41 per cent share of the gas market.
Neither the Department of Energy and Climate Change nor
British Gas were available for comment outside of regular