Citizens Advice response to Ofgem consultation on amending the methodology for setting the Earnings Before Interest and Tax (EBIT) allowance
We welcome this review of supplier profit margin (EBIT) allowance within the retail price cap. We believe the allowance of 1.9% of costs should be reduced. This is necessary to reflect the series of decisions Ofgem has taken that have reduced the risk on suppliers and generally transferred that risk onto consumers. This means that the risks faced by suppliers have not increased in line with costs, due to these extra protections provided, and so increasing the profit margin in line with costs is not justified. Consumers cannot be asked to bear more risk on behalf of suppliers and also compensate suppliers for that risk.