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Finance & Investment This week Ofgem interim chief tells MPs that suppliers have no automatic right to make a profit at all Energy suppliers have 'no entitlement' to profit, says Ofgem E nergy suppliers "should have no entitlement to any level of profit", according to the energy regulator. Giving evidence to the Energy and Climate Change Select Committee (ECCC), the interim chief executive of Ofgem, Andrew Wright, said energy companies Hang on: profit should depend on service had to "earn the right" to make a profit through good customer service. Wright also said that transparent information from suppliers on profit was important "because it helps build trust and confidence in the market". He said: "Consumers need good information on costs and profits in order to give them confidence that the companies are not profiteering at their expense." This comes after Ofgem's latest annual review revealed that the big six energy companies' profits fell last year by £133 million (3.4 per cent) from £3.9 billion to £3.7 billion. Supply profits increased from £1.25 billion in 2011 to £1.6 billion in 2012, as retail margins grew from 2.8 per cent to 4.3 per cent, but falls in generation profits more than offset this. Ofgem's figures showed the average margin in generation in 2012 was 20 per cent, down from 24 per cent the previous year. Wright also told MPs "it has never been easier than today for consumers to change their supplier". However, he added that Ofgem was looking at whether more could be done. MB Water Severn Trent profit down by 6 per cent Severn Trent has seen a 6 per cent slump in profit before tax, due to increased capital investment. The water company recorded a capital investment increase of 12.5 per cent to £269 million, while it also shouldered extra costs resulting from the adoption of private sewers. Despite this, it said its financial results are "in line to deliver full-year expectations" and confirmed a 6 per cent increase in dividend payouts. According to the company's interim results for the six months to 30 September 2013, its underlying group profit before tax decreased by 5.8 per cent to £141.3 million, compared with £150 million in the same period last year. Severn Trent estimates that its costs associated with private sewers will come to £41 million over the current regulatory period. However, the company's group turnover increased by 0.5 per cent to £922.4 million compared with 2012, with its bills remaining the lowest average combined in England and Wales. Pan-utility UK credit ratings at risk from politics UK utilities are the most likely in Europe to face political interven- Stock watch Shares in National Grid quickly recovered to continue their upward trend following the company's half-year results on Thursday. The company announced a 7 per cent fall in pre-tax profit to £979 million in the six months to 30 September 2013, but investors were reassured that it was in a strong position following regulatory settlements in the UK and US. tion, which would be "to the detriment of their credit quality", according to Moody's. The ratings agency said concerns surrounding the affordability of European decarbonisation and renewables targets are exposing energy companies in the UK to political pressures. Moody's latest analysis, published last week, revealed that SSE (A3 stable) and Centrica (A3 stable) were at particular risk. It said firms were being forced to increase tariffs by more than inflation, which was drawing "considerable attention to their business models" and bringing the risk of political interference. Water Main cleaning hits Dee Valley results Dee Valley Water's pre-tax profit has fallen by 9 per cent as a result of higher operating expenses during the six months to 30 September 2013. In its interim results published last week, the water company said the fall in profit was due to a cleaning operation at its Wrexham ring main. Dee Valley's revenue in the same period increased by £0.5 million to £12 million, which it said reflected a 4 per cent price rise from 1 April 2013. The company said household, industrial and commercial sector volumes in the period were "slightly above management expectations". National Grid share price, 28 October - 22 November It is also expected to continue paying dividends that match or exceed inflation. The company expects to grow its regulated asset base, which includes US as well as UK networks, by around 6 per cent by the end of the 2013/14 financial year. Steve Holliday, chief executive of National Grid, said it was a "solid start" in line with expectations. 790p 786p 782p 778p 774p 770p 766p 28 Oct 1 Nov 6 11 14 19 22 UTILITY WEEK | 29th November - 5th December 2013 | 17