There was anger today at the news this morning that energy companies' profits had soared eight-fold from £15 to £125 per customer per year, reports Shamik Das.
There was anger today at the news this morning that energy companies’ profits had soared eight-fold from £15 to £125 per customer per year. Friends of the Earth said it was “outrageous” the energy fat cats were raking in the profits while people face “rocketing” bills and “shiver in cold homes”.
FoE executive director Andy Atkins said:
“It’s outrageous that Big Six profits are soaring while families across the nation struggle to pay rocketing fuel bills and shiver in cold homes.
“Government action to end this rip-off is essential, but Ministers must also tackle the main cause of huge fuel price hikes – our reliance on expensive gas. Energy firms must be forced to fix our broken electricity system by investing in energy efficiency and clean, home-grown power we can all afford.”
Energy regulator Ofgem, which revealed the figures, has called for “radical reform” of the energy sector, so we end up with a “simpler, more competitive energy market”. They plan to reform the system to ensure “simple tariffs, clearer bills and annual statements” for customers.
Their headline plans (pdf) are:
• Consumers wanting a no frills tariff will get a simple unit price and a fixed standing charge set by Ofgem;
• Consumers seeking more innovative tariffs will get protection against price increases for the duration of their deal; and
• Standardised price information will allow consumers to compare easily standard and more innovative tariffs.
Ofgem say the consultation unveiled today is “the first of four waves of reform” – in November, they will unveil detailed proposals to reform the energy market to help the business sector; in December there will be further decisions on proposals on liquidity to break the stranglehold of the Big Six in the wholesale electricity market; and in the New Year they will publish a report into how to make energy company accounts more transparent.
As the BBC’s Damian Kahya writes, the new plans, though still complex, are likely to bring down prices:
In addition to the new simple tariffs, companies will still be allowed to offer an almost infinite range of fixed rate deals, similar to mobile phone contracts. Though complex, those deals may end up cheaper than a standard rate, especially if they are tied to the planned roll out of smart meters.
These complicated deals may also offer greater savings to households that can afford special devices designed to use more electricity when the price is low. It’s exactly that type of complexity which has put many lower income households off switching to cheaper tariffs, a problem Ofgem is trying to solve.
The coming consultation will give the regulator a chance to see if it can be fixed, perhaps by making all tariffs – even smart meter deals – directly comparable on the same terms.
Let’s hope they do.
See also:
• As energy company buckles, Miliband needs to pick more battles – Alex Hern, October 12th 2011
• Huhne’s tough talk on energy companies exactly what we need – Natan Doron, September 20th 2011
• Government needs to take on the energy companies to bring down prices – Barry Gardiner MP, August 17th 2011
• Misselling is only the beginning of the energy companies’ sins – Huw Irranca-Davies MP, July 25th 2011
• Warnings over Scottish fuel poverty target as energy chief enjoys £2m bonus – Ed Jacobs, July 25th 2011
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34 Responses to “Outrage at 733 per cent rise in energy companies’ profits”
John Ruddy
Much as it pains me to support the energy companies, you are being disingenuous with your statistics at best. While the change in how much profit per customer the companies are making sounds really impressive if it is said to be from £15 a year to £125 a year – this isnt a year on year change.
The £15 a year profit margin refers only to a single month in the summer, when their profits are at their lowest. Remember that in essence, they are paying for capacity at that point in the year which is not used, until the winter.
The figure which should be used is one of £90 a year, for the same time LAST YEAR. Compare that to a figure of £125 a year, which does show an increase that should be challenged – but not as drastic as you make out.
Let’s end the tyranny of the big six energy companies | Left Foot Forward
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Tye
How can the government and people alike be so deluded as to think that making tariffs clearer will bring the cost of bills down. Making the tariffs easier to understand does not deal with the underlining issue, which is we are all getting ripped off,and the the government are powerless to do anything about this. Am i the only one who can recognize that the endemic collusion among the so called big six does not allow you to get cheaper prices.The government should stop talking about easier tariffs and grow a back bone and,either admit that they are powerless,or force these greedy companies to lower their prices.
Richard Pinder
A vast amount of cheap natural gas in the form of shale has been discovered in north-west England, an estimated 200 trillion cubic feet of shale gas, and according to the British Geological Survey, shale gas resources under the North Sea could dwarf on-shore supplies. Now if the Government could prevent the fat cats from profiting from shale gas by not allowing them to own the rights to shale gas resources, then the competition with new shale gas companies would have the potential to force down prices, end fuel poverty and save the economy.
AnthonyJemmett
Outrage at 733 per cent rise in energy companies’ profits. Left Foot Forward has best fat cat pic seen in ages! http://t.co/jOfJToXa #greed