The Warm This Winter coalition published its inaugural Tariff Watch report in August 2023, produced in partnership with Future Energy Associates1. The report estimates that household energy suppliers, the companies that provide consumers with gas and electricity, could rack up £1.74bn in profits over the next 12 months from customers' energy bills1.
The coalition states that this figure is enough to wipe out GB energy debt through a "Help to Repay" scheme and still leave suppliers in profit by around half a billion pounds, and that it is in addition to any extra profit made from Ofgem's Covid and Ukraine allowances1. Tariff Watch is described as a new series of quarterly reports from the coalition1.
"Our inaugural report reveals that household energy suppliers - the companies which provide consumers with gas and electricity - could rack up £1.74bn in profits over the next 12 months"
The report's findings sit alongside figures published in later editions of the series. The second report, from October 2023, states that energy firms spend £242 per customer on operating costs, making up 13% of customers' bills, with roughly 11% of operating costs going on marketing such as sponsoring football teams, event venues and creating TV adverts, against around 12% on operating customer contact centres1. A January 2024 edition states that households are being hit by 14 obscure energy charges passed on through electricity standing charges, which it says have surged 119% since winter 2020/21 and account for £194 a year for every household1. An April 2024 edition states that the majority of households on fixed energy tariffs are now paying more than the current price cap, and that exit fees are trapping them on those deals1.
The coalition's wider position is that the system allows suppliers to increase the profit they make on each customer as energy prices rise, and that without an overhaul of the grid and tariffs households will continue to lose out1. The report also covers which regions are being hit hardest by variations in costs1.
Why it matters for households
The £1.74bn figure is an estimate of supplier profit drawn from customers' bills, not a charge added to any individual bill. For a household, the practical relevance lies in how the money that leaves a monthly direct debit is divided between wholesale energy, network costs, operating costs, marketing and margin. The later Tariff Watch editions put operating costs at £242 per customer, or 13% of bills, and standing charges at £194 a year per household1. Standing charges are fixed daily amounts, so they are paid regardless of how much gas or electricity a home uses, which limits what a household can do through reduced consumption alone. The April 2024 finding that most fixed-tariff households pay more than the price cap, with exit fees limiting movement, bears directly on how much control a home has over its own costs1. How suppliers set margins and what they count as operating costs is set out in our guide to energy supplier profits and margins, and the structure of the market is covered under energy suppliers.
What happens next
Tariff Watch is a quarterly series, so further editions are expected1. No dates beyond the published editions have been reported.
Sources1 cited
- Tariff Watch, warmthiswinter.org.uk