ENERGY network companies have raked in more than £4 billion in excess profits from the cost-of-living crisis, research by Citizens Advice reveals today.

The firms, which provide pipes and cables to households, amassed the extra cash over the last four years.

Regulator Ofgem sets price controls for the firms, which are monopolies with no competitor, and the charges are added onto household bills.

But analysing Ofgem’s company performance figures, Citizens Advice revealed that the regulator allowed greedy firms to profit from the soaring inflation that drove the cost-of-living crisis. 

The charity says that firms benefited from borrowing costs being overestimated in the current price control, which sets the maximum price energy networks can charge, due to high inflation.

The spike in inflation allowed firms to recover costs for borrowing that hugely exceeded the actual cost of borrowing — a flaw which Citizens Advice says it warned Ofgem about in 2020. 

Citizens Advice is now calling on firms to use the excess profits to support struggling households, with some five million trapped in energy debt.

The total energy debt households owe has soared to £3.8bn, nearly the same amount as the excess profits made by network firms.

Dame Clare Moriarty, Citizens Advice chief executive, said: “We’ve called out the billions of pounds of excess profits made by these companies before, and Ofgem said it would get tougher in subsequent price controls. 

“The measures it put in place have clearly failed.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, commented: “Our own data suggests that the group-level profits made by these firms run to the tens of billions and are part of a wider energy industry that has made over £483bn profits during the energy bills crisis.

“These excesses, along with our reliance on volatile fossil gas prices, market flaws and our leaky housing stock are why energy bills remain at such high levels.”

He added that many network firms are ultimately owned by “vampire” funds and firms based in Australia, Canada, China, Germany, Hong Kong, Qatar and the US. 

Average bills are two-thirds higher than they were in 2021, and are due to increase by another 5 per cent in April. 

National Pensioners Convention general secretary Jan Shortt said the rises are expected to add £85 to a bill that is already “crippling” for most older people.

She said: “Older people have a fixed income and when bills rise, they have to make critical choices. 

“When older people are freezing in their own homes and they understand the wealth being gleaned from them and other energy users by suppliers, it really hurts.

“When homes are cold and damp, we see an increase in respiratory conditions, a potential increase in stroke and heart disease and in some cases dying of cold.  

“In the 21st century, this is a shameful way to treat the generation that worked, saved, contributed and still want to play a part in the country’s future.”

An Ofgem spokesperson said: “The issue raised by Citizens Advice arose due to extraordinary levels of inflation in 2021-22.

“Inflation prior to this period has generally been close to the Bank of England target, meaning consumers paid a fair return. 

“While the figures quoted by Citizens Advice seem large when added over many years, they amount to a few pounds a year on consumer bills. 

“After a wide and public consultation we decided to adjust our price controls going forward so that such inflation shocks do not lead to any excessive financial overperformance.”

A aovernment spokesperson said: “Every family and business has paid the price of rising energy bills, which are a direct result of Britain’s vulnerability to volatile global gas markets.

“The only way to bring down bills for good is by making Britain a clean energy superpower, which will ensure our energy security, create jobs and tackle the climate crisis.

“Ofgem is already bringing in new price controls which will continue to deliver the investment needed in our grid, while protecting consumers.”