By Daniel Hunter

A new report released by the Energy and Climate Change Committee (ECCC) claims that energy regulator Ofgem is not doing enough to ensure that energy company profits are transparent.

The MPs report says that Ofgem is 'failing consumers by not taking all possible steps to improve openness', and that 'working out exactly how their profits are made requires forensic accountants'.

Ofgem said it had made energy companies produce yearly financial statements and they had been reviewed by accountants.

"At a time when many people are struggling with the rising costs of energy, consumers need reassurance that the profits being made by the 'big six' are not excessive," Sir Robert Smith, on behalf of the committee, said.

The big six are E.On, SSE, British Gas, Npower, EDF and Scottish Power.

They have different divisions to deal with the different functions of their businesses: generation, trading and supply.

The committee said that the divisions sometimes bought and sold services and energy from each other, making it difficult to work out how much money was being made overall.

"Greater transparency is urgently needed to reassure consumers that high energy prices are not fuelling excessive profits," the committee said.

The MPs criticised Ofgem for having a "relatively light touch approach and for not fully implementing the recommendations of the accountants it commissioned to improve how energy companies report their profits".

"Ofgem needs to use its teeth a bit more and force the energy companies to do everything they can to prove that they are squeaky clean when it comes to making and reporting their profits," said committee member John Robertson.

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