The energy companies are now making a record £96 per household.
The energy companies are now making a record £96 per household
The profits of the big energy companies have doubled in the past year despite a drop in the price of wholesale gas, according to new figures from industry regulator Ofgem.
The profit on selling gas has now reached 10 per cent – an increase on the 9 per cent recorded last month and double the 5 per cent profit margin companies were making this time last year.
As the Times reports today (£), this means that “over the next 12 months energy companies are forecast to make an annual profit from each dual-fuel household of £96, up from £91 last month and £44 a year ago”.
As the graph demonstrates (click to enlarge), in the past year average energy company profits per duel-fuel household have risen while the wholesale price of gas has fallen.
Indeed, it’s worth looking at the profits of the big six over a longer period, because despite wholesale gas prices being at their lowest level since 2010 the overall trend in terms of consumer bills and company profits has been only one way: up.
Indeed, profits per customer for the big six energy firms rose by 77 per cent last year. According to a report by the Telegraph from last November, profits at the big energy companies were five times higher at the end of 2013 than they were in 2009, with the big six making a combined £1.2 billion in their household supply businesses in 2012.
Nor is this new. In recent years the big energy companies have raked it in while most people have struggled with ever-larger bills.
Scottish Power more than doubled its pre-tax profits in 2012 to £712m. The company’s chief corporate officer Keith Anderson also received a £129,000 bonus, taking his total pay for 2012 to over half a million pounds, according to the Guardian. The Spanish chairman of Scottish Power also had his pay packet doubled to £10.5 million in 2011 – shortly before the company raised prices for 2.4 million British households.
ScottishPower’s accounts for 2012 showed that £890m was paid out to the shareholders of Iberdrola. Bonuses for directors also rose from £19,000 to £129,000.
Npower announced at the end of last year that it would be putting up energy bills by 10.4 per cent from 1 December – the highest price rise so far by any supplier. And yet it was reported in April of 2013 that, despite raking in an estimated £766 million in profit over the last three years, the company paid no corporation tax.
Npower chief executive Paul Massara was asked in April of last year by the Commons Energy Select committee how much corporation tax the company had paid in the years 2009, 2010 and 2011.
Massara replied: “We will not have paid corporation tax in those three years. There is a very simple reason why, because effectively we have invested £5bn in the last five years building power plant, creating jobs, creating employment and helping to keep the lights on.”
In 2012 profits at Npower increased by 25 per cent to £390million soon after it imposed large price rises on customers.
Scottish and Southern Energy (SSE)
Energy company SSE announced two weeks ago that it would be raising electricity and gas prices by an average of 8.2 per cent from 15 November 2013.
Two executive directors of SSE both earned £1.4 million last year compared to just short of £700,000 in 2012.
For 2012, the company made profits of nearly £1,500 a minute.
Centrica (British Gas)
Centrica, the company that owns British Gas, saw adjusted operating profit rise by 9 per cent to £1.58bn for the six months of 2013 to 30 June. Five bosses also pocketed £16.4 million in March of last year. Last year British Gas was also accused of boosting its balance by keeping hold of money owed to ex-customers who have built up credit on their accounts by using less energy than their estimated consumption.
Profits at E.on grew by almost 15 per cent in the first half of 2013, boosted by a cold winter, making £273m in the first six months. This was an increase of 14.7 per cent on the same period in 2012.
Chief executive of E.ON Johannes Teyssen pocketed a basic salary of €1m (about £860,000) in 2010; the real value of the total package, however – including bonuses and share options – was thought to be €4.2m (£3.6m).
EDF actually made £92m losses for domestic supply in 2012. However the energy giant made record profits of £903 million in the UK for the first half of 2013 due to increased gas use due to the coldest spring in 50 years.
In January 2012 EDF was criticised for cutting prices by 5 per cent – just two months ago it increased them by 15.4 per cent.
Still think we don’t need Ed Miliband’s price freeze?Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.