This study shows the profitability of UK electricity generation in 2021. All figures come from OFGEM unless stated otherwise. They show increased profits for generation before the recent surge in prices. Generation should be subject to CMA investigation but never will be under Westminster rule and OFGEM's Laissez-faire approach. This approach has led to increased deaths and increased hospitalisations from hypothermia. It is linked to an increase in malnutrition as the choice is between heating and eating. There is no justification for increases in bills to the extent we've seen. every other European country has lower bills. OFGEM's Marginal Pricing model allows generators to manipulate prices by taking low cost plant offline and replacing it with more expensive generation sets. The last plant hooked up gets to set the price for the whole market. This is madness on stilts. Businesses cannot cope with the rises and as support schemes wind down people will freeze and firms will go bust. The NHS has no way of coping with rising fuel bills but to lengthen waiting lists. Councils can only balance their books by cutting services. We need a reset and nothing is being done. I intend to update this study very soon and will post it as soon as the numbers can be found. They are no longer being reported regularly by OFGEM and parts of the dataset have gone missing.

1. Review of Electricity Company Profitability
The Generation Game
Revised Edition to 31st Mar 2021
Cllr Derek W Louden
Abbian House
Tower Street
Tain
Ross-shire
IV19 1DY
Tel: 01862 892734
Mob: 07876 774412
Email: LoudenDW@aol.com

2. Seven years ago the “Big Six” presented a uniform story of low returns which no-one could consider
were exhibiting evidence of monopoly or oligopoly profit to the Competition and Markets Authority
Inquiry. I lobbied hard to have the CMA look at the wholesale market but was literally laughed at for
my pains. There is no trace of the evidence I provided being referred to in the CMA’s report. Each
year I’ve had another look at company profitability. What have I found?
Scottish & Southern Energy’s Supply business – their retail arm (now sold) selling electricity to
customers was loss making and earning lower returns than during the CMA Inquiry in 2015:
The Generation business which produces the electricity is shown below:
SSE’s returns have risen since 2015. SSE earned 40.45% on Generation Sales in 2020. Of every £1 in
sales, over 40p is profit. The CMA only looked at the Supply/Retail side of their business. This
ensured they found nothing wrong.
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
SSE EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
SSE EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

3. SSE claimed to earn a return of 5% in 2015. By 2020 this had risen to 21.75% when Generation and
Supply are looked at together. CMA dismissed concerns about the Generation business and
problems appear to have worsened since the CMA Inquiry. So much for SSE, what about the others?
Centrica’s supply business was facing real competition over the last decade. The return earned has
fallen to just above zero. Is the competition in the Supply business reflected in reduced returns for
Generation?
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return SSE EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
Centrica EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

4. Centrica’s Generation arm performance is illustrated in the diagram below.
This shows that Centrica earned a 26.15% EBITDA rate of return on generation sales in the most
recent year for which figures are available. This is higher than the 23.82% return in year 2015.
The collapse in the Supply side of the business means Centrica has suffered a decline in recent years
with the return on Total Sales earned in 2020 at 3.47% being well down from 4.68% earned in 2015.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
Centrica EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
Centrica EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-

5. E.On’s Supply Sales to retail customers lost 1.39% in 2020. This is down from 2.84% at the time of
the CMA review in 2015. As with SSE there is a clear sign that competition has eroded EBITDA.
E.On’s return Generation Sales rose dramatically from 18.56% in 2015 to 78.13% in 2019 following
the CMA’s signal that profits earned from generation would be ignored. In 2020 E.On sold out to
RWE exiting the Generation business. I can’t really think why a firm would sell out of an industry
earning a 78.13% EBITDA return. Unless it was to pocket the Capital Gain which would only generate
a tax bill if the gain couldn’t be “rolled-over”. Which I’d assume it was.
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return E.On EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
E.On EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

6. E.On’s overall performance was well down from a return of 5.85% in 2015 on their business taken as
a whole to -1.39% in 2020.
EDF’s Supply business wasn’t doing well in 2015 earning a return of 1.18% no improvement has been
seen since. In 2020 they lost -2.24% Before you start to weep for them, we’ll move along to the next
diagram....
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return E.On EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
EDF EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

7. EDF earned a whopping 35.92% return from their Generation arm in 2015. They’ve kept the profit in
the part of the business which isn’t exposed to much public scrutiny. Smart move! EDF still has a
high EBITDA return of 30.5% for Generation. The CMA said returns averaged 5.00%.
In 2020 EDF’s EBITDA return on Total Sales is 9.16%. This is well down from 17.13% in 2015.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return EDF EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
EDF EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-

8. RWE npower’s Supply business has not earned a profit since 2014, posting a loss of 0.94% in 2015. In
comparison they posted a loss of -2.17% in 2019. They exited the business in a deal with E.On.
RWE gave its profit percentage from Generation sales at 9.86% in 2015. It rose to 70.34% in 2019.
RWE then exited the business and showed a “Nil” return for 2020.
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return RWE npower EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
RWE npower EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

9. RWE’s profits in their UK business rose steadily reaching 8.15% EBITDA on Total Sales in 2012. This
performance wasn’t maintained. In 2015 the return fell to 2.52% and by 2020 RWE had exited the
market.
Scottish Power made a 4.74% return on Supply sales in 2015. In 2020. Scottish Power’s EBITDA
return on Supply sales is only 0.81%.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return RWE npower EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
Sc Power EBITDA % return on Supply Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

10. Scottish Power saw a Generation profit percentage of 23.82% in 2015. This has risen to 73.8% in
2020. With Cockenzie and Longannet closed a higher return is being earned from green power.
Scottish Power has an EBITDA return on Total Sales of 19.1% in 2020. The return on total sales
increased from 12.12% in 2015. This is the highest return earned by Scottish Power in twelve years
and the second highest overall return in the industry.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return Sc Power EBITDA % return on Generation Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA
%age
Return
Sc Power EBITDA % return on Total Sales
2009 -2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statements_css_2019-2020.pdf

11. The Supply Business dealing with retail sales to customers doesn’t look abnormal. The market seems
to be very competitive with many loss-making firms folding in recent years. Why did the CMA
concentrate on this? Baffling.
When we look at the Generation Sales the position is markedly different with Scottish Power, E.On
and RWE earning returns of over 70% in 2019. In 2020 E.On and RWE’s sales have removed them
from the reporting cycle. Scottish Power earning a 73.8% return means nearly £3 in every £4 is
profit. The Mark-up is 281.68%. Not even OFGEM or the CMA could claim such a return was normal
profit. However my evidence will count for nothing. If a firm earning a Mark-up of 280% says it earns
only 5.00% the CMA must accept they’re telling the truth.
We should also consider whether input costs for raw materials are being set by any of the players
through intra-company trading (central group buying) where the cost might be manipulated to
3.92%
1.57%
5.84%
-0.16%
-1.86%
2.65%
2.37%
4.52%
8.17%
1.45%
0.23%
4.96%
0.18%
4.10%
7.21%
0.07%
1.95%
3.60%
3.01%
3.09%
7.00%
-0.74%
3.92%
4.34%
4.47%
3.68%
2.02%
-0.12%
3.86%
2.91%
6.98%
3.75%
2.62%
1.91%
2.32%
4.37%
4.74%
2.84%
0.05%
1.18%
-0.94%
3.69%
2.57%
3.05%
-1.31%
0.45%
-1.33%
2.52%
-0.07%
2.65%
-0.02%
1.74%
-0.02%
4.57%
3.75%
0.02%
2.63%
2.33%
-0.47%
2.24%
0.04%
1.20%
0.74%
-0.97%
-2.17%
4.57%
0.81%
-1.39%
0.05%
-2.24%
0.00%
-0.01%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
ScPower E.On Centrica EDF RWE SSE
EBITDA
%age
Return EBITDA % return on Supply Sales
2009-2020
2009 2010 2011
2012 2013 2014
2015 2016 2017
2018 2019 2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statement
23.23%
29.89%
25.65%
21.30%
31.99%
63.47%
23.23%
16.70%
28.27%
32.79%
47.17%
61.29%
22.63%
27.84%
29.51%
39.70%
47.42%
54.45%
19.38%
22.69%
35.01%
40.63%
43.35%
50.38%
16.44%
12.84%
22.98%
36.02%
11.26%
52.83%
21.02%
8.77%
19.11%
33.46%
6.37%
23.31%
23.82%
18.56%
24.57%
35.92%
9.86%
27.91%
20.68%
15.41%
22.03%
44.45%
11.59%
31.63%
31.20%
69.31%
19.34%
25.23%
13.41%
31.10%
39.65%
72.73%
20.82%
20.72%
13.32%
28.71%
70.54%
78.13%
24.42%
26.06%
70.34%
42.78%
73.80%
0.00%
26.15%
30.50%
0.00%
40.45%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
ScPower E.On Centrica EDF RWE SSE
EBITDA
%age
Return
EBITDA % return on Generation Sales
2009-2020
2009 2010 2011 2012
2013 2014 2015 2016
2017 2018 2019 2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statement

12. deliver a tax charge in the Parent Company’s country of origin rather than where the profit is really
earned.
The “Big Six” all shared with the Energy and Climate Change Select Committee that they earned 5%
on their Supply business. The Generation business where the money is being made was overlooked
by the Committee. It was also overlooked by the CMA review.
Returns of over 70% on Generation make a mockery of the evidence given to the committee.
We can see above that three of the firms (RWE, Centrica and E.On) are still making the “no more
than 5%” mantra they stuck to at the Energy & Climate Change Committee and also in subsequent
submissions to the CMA Inquiry team.
SSE made a 21.75% EBITDA return in 2020 (2015 - 11.47%), Scottish Power made 19.10% in 2020
(2015 - 12.12%) and EDF made 9.16% in 2020 (2015 - 17.13%) each made considerably more from
their business in the UK when their Generation profits were factored in.
The 2015 CMA inquiry team headed by a former director of N-Power heading a committee of city
grandees produced findings suggesting things were mostly the fault of customers who refused to
switch supplier. Basically they concluded its our own fault we’re being ripped-off.
Whilst that might in part have been true in 2015 it isn’t now. The Generation Game has a fair bit to
do with it. Pensioners, those with disabilities, people dependent on benefits and those in work but
on low incomes will rightly curse OFGEM and the CMA for clearing this exploitative oligopoly of all
blame in 2015 and for encouraging them to carry on regardless. It was a new experience for me to
be laughed at openly by CMA officials. In truth, this is no laughing matter.
DWL 03/04/22
(Cover photo: First Hydro, Dinorwig, Wales, http://www.fhc.co.uk/dinorwig.htm )
9.47%
7.01%
7.51%
4.16%
1.90%
8.76%
9.09%
6.84%
10.02%
12.86%
5.23%
10.73%
8.12%
8.96%
9.90%
15.93%
6.37%
10.90%
6.11%
6.72%
9.80%
16.03%
8.15%
10.57%
7.63%
4.92%
6.24%
14.68%
5.66%
9.87%
12.07%
4.73%
5.93%
15.99%
3.36%
10.42%
12.12%
5.85%
4.68%
17.13%
2.52%
11.47%
7.85%
5.52%
3.40%
17.47%
3.04%
11.79%
8.96%
6.72%
3.26%
11.07%
3.92%
13.46%
13.68%
5.54%
5.34%
8.83%
3.57%
10.41%
13.10%
5.94%
4.15%
7.38%
1.97%
15.96%
19.10%
-1.39%
3.47%
9.16%
0.00%
21.75%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
ScPower E.On Centrica EDF RWE SSE
EBITDA
%age
Return
EBITDA % return on Total Sales
2009-2020
2009 2010 2011
2012 2013 2014
2015 2016 2017
2018 2019 2020
https://www.ofgem.gov.uk/sites/default/files/docs/2021/03/energy_companies_individual_consolidated_segmental_statement