An energy firm which supplies fuel products to large areas of the Highlands and Islands has hit back at criticism from Argyll and Bute’s MP.
Alan Reid accused DCC Energy of making “excess profits” and accused the firm of “boasting” that its strong financial performance was the result of last winter’s cold weather which left many people struggling to heat their homes.
Mr Reid called on the Office of Fair Trading to carry out an investigation into the heating oil market.
DCC Energy denied that heating oil suppliers in Scotland made “excessive profits” - while at the same time confirming that a 48 per cent increase company’s profits in the year to March 2013 was partly the result of colder winter weather.
“Heating oil suppliers in Scotland do not make excessive profits, as a recent OFT investigation made clear,” the company said in a statement.
“Contrary to some recent media coverage DCC Energy in fact made only 1.3 per cent operating margin in the year to March 2013. In that year, which was one of the coldest winters on record, DCC Energy generated a net profit of 1.1 pence per litre, an increase of only 0.2 pence per litre over 2012, which was one of the mildest winters on record
“DCC Energy’s profits increased in the year to March 2013 by 48 per cent as the business benefited from the acquisition of new businesses (the business invested circa £104 million in acquisitions in the year to March 2013); organic growth; and a return to colder winter weather conditions after the exceptionally mild weather in the year to March 2012.
“The oil distribution market in Britain is actually highly competitive, a fact borne out by the recent OFT Off Grid Energy market review. The OFT concluded that ‘margins over the year as a whole do not appear excessive...competition is generally working well...and we found a variety of evidence that rival suppliers compete on price’.
“The OFT also found that more than 90 per cent of the variation in average retail prices is down to world crude oil prices, a factor outside the control of suppliers such as ourselves. Other factors which also add to costs and affect the pricing such as: the location of the depot and the cost to transport fuel in; the availability of local storage; the point in time at which product was purchased by the depot; and how quickly the available product is sold, all of which are outside the control of individual suppliers.”