Why are Energy companies reporting massive profits if wholesale prices are high?

[Twilightimmortal]

The way that energy is getting from the source to our homes must have been made more efficient as the wholesale prices are having no effect on the energy companies profits.

If this is the case why are Ofgem changing the upper limit?

It is not needed as the energy companies are not going to collapse if they don't charge consumers more.

If its about there not being enough energy then they should ration it per household but keep the prices the same.

It feels like we are having to suspend our disbelief that energy prices need to increase when companies are reporting record profits

It's simple maths. If I make a 2% profit on everything I buy and sell, I'll make a larger profit if the price of the commodity I deal with rises.

e.g. I buy £1000 of gas and sell it at £1020 = £20 profit
I buy £5000 of gas and sell it at £5100 = £100 profit.

You are confusing companies that "produce" energy vs companies that supply energy (though some do both).