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Energy Secretary Ed Davey questions gas profits

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Ed Davey, Energy Secretary

Ed Davey has contacted Ofgem and competition authorities questioning the size of the profits in supplying gas to UK homes.

He asked them to consider whether British Gas was a monopoly power that needed a break up to boost the market.

His letter also said he noted the gas market had “little vertical integration”, pointing to analysis that the average profit margin for gas is around three times that of electricity.

“For some companies the profit margin is actually more than 5 times the average profit being made on supplying household electricity.” he said.

British Gas has the largest share of the gas domestic supply market and he said it has charged “one of the highest prices over the last three years”.

If profit margins were the same as for electricity, Davey said that on average the household saving per year would be around £40.

The Big Six were “slow to embrace” the energy saving schemes such as the Green Deal according to the Lib Dem.

Responding to the letter British Gas said it “welcomes” an assessment into the market already being run by the OFT, Ofgem and the Competition & Markets Authority.

It said the data mentioned by Ed Davey has already been “fully disclosed” and in the public domain for a number of months.

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