Ofgem: BDO to probe energy pricing

BDO HAS BEEN called in to conduct a painstaking examination of energy companies’ pricing after they were accused of understating profits in order to increase customer charges.

Regulator Ofgem has asked the leading mid-tier firm to pull apart accounts at the so-called big six suppliers – British Gas, E.On, EDF, Scottish Power, Npower and Scottish & Southern.

In March, Ofgem accused the power giants of pushing up prices in response to soaring costs more quickly than they mark them down when costs retreated, saying it would examine “the facts behind the numbers”.

It has called on suppliers to improve transparency over pricing and help customers understand how retail and wholesale costs are linked.

The big six are bound to produce separate accounts for each business arm, including electricity generation, gas infrastructure and retail services. An Ofgem spokesman said BDO will look into each account area and concluded: “We feel there could be more transparency for the customer.”

BDO told Accountancy Age that it does not provide any other audit or consultancy services to the six energy suppliers, meaning there should not be a conflict of interest when examining the accounts.

A spokesperson commented: “BDO is pleased to confirm its appointment by Ofgem to undertake a review to improve understanding of how the big six energy companies treat their wholesale energy transactions within their financial statements and to make recommendations on how to improve reporting in future years.”