Sparks fly over Big Six’s growing profit margins

Consumer groups call on energy firms to reduce bills for hard-pressed customers

Click to follow
The Independent Online

Anger is growing at fresh accusations of profiteering by the big energy companies while more vulnerable people than ever are facing weeks of freezing houses as the cold weather bites.

Today, the consumer group Which? accused the Big Six energy suppliers of overcharging us all £145 a year. Last Friday, the energy watchdog Ofgem predicted that the profit margins of the big firms would climb £9 to £114 per customer this year, as they continue to fail to pass on savings on the cost of gas and electricity.

“We are utterly appalled that the Big Six’s profit margins are growing off the backs of their refusal to cut their bills in line with wholesale prices, as the number of people dying from the cold could reach 3,000 this week alone,” said Clare Welton of the campaigning group Fuel Poverty Action.

  The criticism comes in the middle of Cold Homes Week, which aims to highlight the woefully insulated homes and high bills of Britain’s fuel poor. “It is a disgrace that we are one of the richest countries in the world yet thousands die of the cold because they can’t afford to keep their homes warm,” said Ed Matthew of the Energy Bill Revolution.

The energy industry joined in the war of words. Lawrence Slade, chief executive of Energy UK, said: “Costs are coming down but, because energy companies buy ahead to fix prices and to plan with certainty, the gas and electricity we are using today has already been paid for.”

He questioned the consumer group’s sums. “The Which? calculations are based on very many assumptions. Each company allocates their costs differently and this makes it difficult to estimate wholesale costs and hedging strategies. Indeed Which?’s hedging assumptions for 2013 are different from Ofgem’s report based on the companies’ actual accounts.”

Dr Richard Westoby, director of retail economics at SSE, one of the Big Six suppliers, also hit out at Which?’s figures: “It is disappointing that the analysis ignores many fundamental factors behind movements in household bills and suppliers’ costs, ranging from weather and consumption to green levies and network costs.”

That hasn’t stopped Which? from submitting the analysis as fresh evidence to the ongoing Competition and Markets Authority’s investigation into the energy market. “The competition inquiry should establish beyond doubt whether the price people are paying today is right,” said Richard Lloyd, Which? director. Meanwhile fuel poverty campaigners said it is time for energy companies to stop making excuses for their excessive prices and unaffordable bills. “We are sick and tired of excuses bouncing between Ofgem, the Government and the Big Six for the fuel poverty and energy bill crisis we are in the grip of,” said Ms Welton.

“The solution is clear: mass home insulation and a move towards affordable, sustainable and democratically owned energy. The Government must stop standing idly by, propping up the poverty profiteers while thousands of people die this winter.”

“If we are to end this needless suffering, we must make the homes of the fuel poor super energy efficient and roll out a national programme, supported by infrastructure funds, that would save UK households billions, slash gas imports and create over 100,000 jobs,” said Mr Matthew. “A fuel-poverty timebomb has been created. While energy bills have recently dropped, many are still suffering and will struggle even more when they rise again in future.”

Comments