Scottish and Southern Energy has recently announced bumper profit figures, and British Gas is hinting that they’re on course to improve upon the 80% increase in profits it made in the first half of 2009. This could leave you scratching your head, wondering why you’re being asked to pay energy prices that, despite slight decreases at the start of this year, are about as high as they’ve ever been.

Although it may not feel like it for us, an increase in profitability is in fact good news for the industry as a whole. Firstly, it means that suppliers are looking in healthy shape when it comes to securing our future energy supplies. On top of this, the government has set very tough targets for renewable energy generation and reducing carbon emissions. All of this is going to cost a serious amount of money, with estimates coming in at upwards of £200 billion. The government are expecting the energy companies to fund this, but they can only do so if they’re profitable organisations.

In the short term, it means that we as consumers should to a large extent be protected from any price increases in 2010. It even raises the possibility of price decreases in the shorter term. A note of caution though – nothing can be guaranteed in this market!

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