The FT has reported that:

Britain's big energy companies should be forced to open their books to show separately how much profit they make from their supply and generation arms, John Hutton, business secretary, has argued.

Mr Hutton has urged Ofgem, the energy regulator, to address the "lack of transparency" in the accounts of Britain's big companies, which he claims damages the reputation of the industry and confuses the public.

He also believes the failure of some big integrated energy companies to record separately their profits in generation and retail means potential new entrants to the market do not have the data they need, holding back competition.

Wow! At last! The penny is beginning to drop. Consolidated financial statements do not meet the needs of all users of accounts. It's something I've said for a long time, but it's amazing how long it has taken for the message to get through. But it seems like it has:

Mr Hutton has always argued that energy companies need to make healthy profits in order to invest in new infrastructure, including renewables, and he has opposed the idea of a one-off windfall tax on the sector.

But he believes more transparency in the accounts of [UK energy] companies .. could help competition and improve regulation and policy making.

Some companies argue they are already providing separate information on their generation and retail activities, but Mr Hutton and Ofgem believe it falls short of full unbundling of their accounts.

Eon UK, for example, says its UK annual report strips out key figures - such as sales and profit before tax - for generation and retail, but they are not separate accounts.

Quite so. IFRS 8 data is not good enough. In fact, it's just about useless for any real decision making purpose - which is, of course, exactly what the IASB intended.

We need real segment reports that are both meaningful as sets of accounts in their own right and that are presented on a segment and country-by-country basis.

In 1975 to UK's Accounting Standards Steering Committee said in a seminal document called the Corporate Report (no link, sorry) that we needed financial reports to let us appraise the following:

1. the performance of the entity;
2. its effectiveness in achieving stated objectives;
3. evaluating management performance, including on employment, investment and profit distribution;
4. the company's directors;
5. the economic stability of the entity;
6. the liquidity of the entity;
7. assessing the capacity of the entity to make future reallocations of its resources for either economic or social purposes or both;
8. estimating the future prospects of the entity;
9. assessing the performance of individual companies within a group;
10. evaluating the economic function and performance of the entity in relation to society and the national interest, and the social costs and benefits attributable to the entity;
11. the compliance of the entity with taxation regulations, company law, contractual and other legal obligations and requirements (particularly when independently identified);
12. the entity's business and products;
13. comparative performance of the entity;
14. the value of the user's own or other user's present or prospective interests in or claims on the entity;
15. ascertaining the ownership and control of the entity.

We're vaguely close to 1, 3, 4, 5, 6, 12 and 13. We're part way to 2, 7, 8 and 14 (if you think fair value does this). We're miles away from 9, 10, 11 and 15.

John Hutton is simply reiterating a call for reform with regard to category 9 made 33 years ago. As he said:

"My view is that the lack of transparency as to the accounts of our major energy supply companies is potentially problematic both in terms of the reputation of the industry itself and in terms of good policy making,"

"I would be particularly interested to hear your views on the merits of requiring vertically integrated energy companies to report the accounts of their supply and generation businesses separately."

It's time we had the data.