Energy Companies Pocket £3.9bn in ‘Excess Profits’ Amid Cost of Living Crisis

Citizens Advice Calls for Action as Households Struggle with Rising Bills

Energy network companies in Great Britain have gained nearly £4bn in "excess profits" over the past four years, according to a new Citizens Advice report. The report claims these companies have benefited from flawed regulations set by Ofgem, forcing consumers to overpay on household bills during the ongoing cost-of-living crisis.

How Did This Happen?

The analysis found that Ofgem miscalculated energy companies' borrowing costs, allowing them to recover billions from consumers unnecessarily. Even as interest rates increased, many energy companies secured fixed-rate loans that shielded them from rising costs—yet they were still allowed to charge households as if they had been affected.

As a result, energy networks—including National Grid, UK Power Networks, and Scottish Power—may have overcharged by £3.9bn which applies from 2021 to 2028 despite households struggling with record-high energy bills.

Citizens Advice: ‘Unfair Profits Must Go Back to Consumers’

Dame Clare Moriarty, Chief Executive of Citizens Advice, condemned the situation, stating:
"We now know that while households have struggled with sky-high energy bills, network companies have been making astronomical profits."

Regulator & Industry Response

An Ofgem spokesperson downplayed the impact on individual bills, claiming the effect equates to "a few pounds a year" per consumer. However, they acknowledged the issue and promised stricter price controls in future regulations to prevent excessive profits.

Meanwhile, a spokesperson for the Energy Networks Association defended the profits, arguing that the report "oversimplifies" the energy sector’s long-term investment needs. They highlighted that energy networks are set to bring in over £100bn in private investment between 2021 and 2031 to strengthen the grid and support economic growth.

What’s Next?

Citizens Advice is calling for urgent action to ensure fair pricing and proper regulation moving forward. They insist that network companies should return excess profits to struggling households, especially at a time when many families are choosing between heating and other essential needs.

As energy bills remain a top concern for millions, the debate over fair pricing and corporate responsibility is far from over.