James Daley: Don't like paying higher bills? Tough
Saturday 23 February 2008
The news that British Gas generated profits of almost £600m last year sparked yet another wave of anti-capitalist hysteria on Thursday. Incensed consumer groups and unions demanded the immediate introduction of windfall taxes and tighter regulation, while impoverished families were interviewed on the television, talking about how they could barely feed themselves due to their ever-growing fuel bills.
But while rising energy prices are a frustration for everyone, consumer groups are wrong to believe that the price hikes are the result of an inefficient market populated by greedy corporations, who need to be kept on a tighter leash.
Indeed, British Gas is the very proof that the market works well. In 2006, when it let its prices drift out of kilter with its competitors, it shed more than a million customers. Meanwhile, Scottish & Southern Energy has climbed from being the fifth largest provider in the UK to the second in just five years, driven by its competitive pricing and good customer service.
For consumers who are unhappy, it is now simpler than ever to switch, with sites such as www.uswitch.com and www.switchwithwhich.com helping you compare the best deals and complete the move in a matter of minutes.
And, according to the energy regulator Ofgem, anyone who hasn't changed provider since the market was opened up to full competition in 1999 could instantly save at least £100 by switching.
While it is certainly true that each of the main energy providers have been raising their prices over the past few months, these hikes have been driven by a number of external influences, not merely by corporate greed.
For a start, the wholesale price of gas is on the rise. While Britain used to generate much of its own gas in the North Sea, our reserves are now depleted and today this accounts for only 30 per cent of our supply. As a result, we're now having to import a greater proportion from overseas, which naturally costs more.
At the same time, energy companies are suffering under an increasing regulatory burden – forced to deliver a growing proportion of their energy from renewable resources each year, and to compete with European carbon emission caps. Each of these requirements is helping to edge up the cost of providing us with our gas and electricity, and these are long-term trends that we'll have to get used to. Creating a greener society costs money.
Perhaps because it's only two years since energy providers were last raising their prices, it feels like our bills only ever go in one direction. But, in fact, there are occasional reductions too.
When wholesale gas prices fell last year, British Gas was one of the first companies to pass the benefits on to customers, and as recently as October, the company found itself fighting a price war with Scottish & Southern to maintain its place as the cheapest online energy supplier.
So all the talk about excessive profits is nonsense. British Gas has millions of customers, and should be allowed to make a profit. If it doesn't price its products keenly, and treat its customers fairly, it knows they will go elsewhere.
Furthermore, if you've got a pension, chances are you've got some money indirectly invested in their shares anyway – and you should be very glad you have. Over the last three years, shares in Centrica, which owns British Gas, have more than doubled – giving you more money to spend on your fuel bills when you reach retirement.
Free markets and competition work in the favour of both consumers and shareholders – and there's nothing to stop you being both. Calls for windfall taxes and tighter regulation will only force energy companies to raise their prices even further.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
How couples can protect their financial interests when cohabiting
Authorities failing in hunt for 'most wanted' tax dodgers who owe HMRC £844m
Child Maintenance Service to replace Child Support Agency - but is it better?
A student's guide to financial survival: You don't have to drown in debt at university
Bargain Hunter: Kit yourself out in sports gear - at a healthy discount of up to 75%
- 1 Paul Scholes: Manchester City were so good against Liverpool I felt like turning the television off
- 2 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 3 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
- 4 Homer Simpson takes the ALS ice bucket challenge because of course he does
- 5 Hello Kitty is not a cat after all
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
- < Previous
- Next >
iJobs Money & Business
Highly Competitive Salary: Austen Lloyd: CITY - An excellent new instruction w...
£500 per day: Harrington Starr: SQL Server Developer SQL, PHP, C#, Real Time,...
£600 per day: Harrington Starr: C#.NET Developer C#, Win Forms, WPF, WCF, MVVM...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony