One of the UK's biggest energy suppliers claimed that a £545 million profit was merely “acceptable”, further fuelling the controversy over the soaring price of energy.

RWE, the German owner of npower, revealed that UK profits climbed 40 per cent to €724 million yesterday, marking an acceptable level of profit for the first time since 2003.

The figures were released the day after Ofgem, the energy markets regulator, said that it would conduct a formal investigation into the UK energy supply market because of concerns that different companies had moved to increase prices at the same time.

RWE's group results also suggested that the days of cheap energy were over, as it told investors that it planned to invest €30 billion in strengthening its networks, gas pipelines, wind farms and power stations over the next four years. Investment in the UK, where it must replace two older power stations, is likely to reach €5 billion by 2012.

RWE's figures show that its UK arm is making a remarkably similar level of profit to British Gas's residential business - which announced a £571 million profit - despite the two different power-generation portfolios and trading strategies.

As the UK's third-biggest generator, RWE Npower makes most of its money from rising wholesale energy prices. The improvement at RWE npower came largely from the better performance at its power stations, in which, as the third-biggest generator in the UK, it has invested heavily.

In contrast, its retail arm had a difficult year. RWE Npower was the first big energy supplier to put up prices in January, by 17.2 per cent for gas and 12.7 per cent for electricity. It was quickly followed by four of the five other suppliers, including British Gas.

A spokesman for RWE npower said: “We have great confidence in this market and will co-operate fully with Ofgem. If it helps to revive consumers' confidence, then an investigation will be a good thing.”

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