BRITAIN’S household energy suppliers could rack up to £1.74 billion in profits over the next 12 months from customers’ energy bills, a report will reveal today.

Researchers from the Future Energy Associates warned that the profits energy companies make from bills is “largely omitted from public discourse.”

In their first quarterly Warm Winter Tariff Watch report, they estimated that firms are currently allowed to make an average of £60 profit per household — more than twice the £27 charged on the variable tariff during spring 2017.

“With energy bills predicted to remain at similar levels and 29 million households currently on the standard variable tariff, the combined profit energy firms could make in the next 12 months is £1.74bn,” the report said. 

The researchers explained that according to the price cap profits are accounted for by the Headroom Allowance, allowing for unforeseen incidents, and the Earnings before Interest and Taxes (EBIT), a general allowance of supplier profit per household.

These are calculated as a percentage of the bill — about half of which is due to wholesale energy costs — with EBIT at 1.94 per cent and Headroom Allowance at 1.46 per cent, the researchers said.

“The fact that these are calculated as percentages of the rest of the bill means that suppliers have benefited from the surge in wholesale prices,” they added.

It said that the “EBIT is predicted to increase from 1.9 per cent to 2.4 per cent in Ofgem’s Q4 2023 price cap.”

Households paying more than 10 per cent of their net income on fuel went from 19.2 per cent in 2019/20 to 55 per cent in January, the Child Poverty Action Group has warned.

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, which is part of the Warm This Winter campaign, said: “This report shines a light on the murky depths of Britain’s broken energy system.

“Without fundamental overhaul of the energy grid and energy tariffs, households will continue to lose out while suppliers will profit.”

The Warm This Winter Tariff Watch report also found regional variations in the cost of energy.

Manweb, which covers Merseyside, north Wales and parts of Cheshire, had the highest daily standing charge for electricity at 65.8p, with London at the lowest at 41.9p.

For gas, Scottish Power and Scottish Hydro had the highest standing charges at 33.9p.