A forensic review of UK energy companies' accounting practices has found no evidence of financial irregularities aimed at justifying steep rises in retail gas and electricity bills last year, regulator Ofgem, which commissioned the study, said.
A string of double-digit price increases, announced in the summer of 2011 by utilities, helped drive UK inflation to a three-year high in September at a time of stagnant wage growth and economic hardship, prompting a consumer backlash.
The energy watchdog launched the study partly to answer allegations that utilities had used accounting techniques to justify raising retail energy bills, by making those operations appear less profitable.
Britain's six largest utilities, E.ON, RWE, Centrica, SSE, Scottish Power and EDF have not shifted profits between business segments to make retail operations look less successful, Ofgem said on Tuesday.
The analysis, undertaken by accounting firm BDO, found no evidence of distortions to company profitability and said reporting practices were in line with guidelines.
The investigation did, however, find discrepancies between reporting practices of all six energy companies that Ofgem wants fixed with reforms, including making financial information comparable.
These changes are part of a raft of reforms aimed at making the retail market simpler, clearer and more competitive, the regulator said.
Ofgem aims to make all utilities report the cost of fuels used to generate electricity in time for their year-end financial statements later this year.
Ofgem considers that transparency would significantly improve if there was standardisation across all 6 companies in the way generation fuel costs are represented. This is why we are proposing this, it said.
(Reporting by Oleg Vukmanovic; editing by James Jukwey)