Putting up your energy prices hurts us more than it hurts you. That was the shock revelation during the testimony of Britain’s “Big Six” utility companies. SSE “regrets profoundly” having to raise customer costs by 10 per cent, said William Morris, its managing director. “None of us want prices to rise.”
British Gas “thought deeply” before whacking 9.2 per cent on to bills, explained its managing director Ian Peters. It’s “the hardest decision we take”, insisted Neil Clitheroe, chief executive of Scottish Power, which is raising charges to 2.2 million customers by 8.6 per cent.
Our sympathies immediately switched to the boardrooms of the energy giants, where sweating, grim-faced directors had sensitively agonised about the suffering they were inflicting on their customers. It was tough for them too. Clitheroe explained that 60,000 customers called in with their worries “virtually straight away” after the rise, adding that the company continued to “manage each one of them”. He did not elaborate on how – but this presumably at least involves a Clintonian affirmation that “we feel your pain”.
Asked by the less-than-sympathetic Labour MP Albert Owen how his annual bonus had fared in this period of rising prices, Clitheroe explained it had remained “flat” and was based on “customer and employee satisfaction, cost controls and profits”. You have to hope for his sake that the Scottish Power remuneration committee is well satisfied with performance in the last three categories since “customer satisfaction” seems unlikely to soar this year.
SSE’s Morris was also “profoundly worried” about loose talk of people (like, though for some reason Morris did not mention this, the crazed anti-capitalist eco-warriors Sir John Major) having to choose between “eating and heating” this winter. This was quite unnecessary because “the systems are in place to prevent that”. This played to a wider Morris theme, that the Big Six’s problem was their failure to get their message across. The message was largely their use of (some of) their huge profits for investment, and that green subsidies – currently a “poll tax” as Eon’s Tony Cocker described it – should be switched to general taxation.
Certainly, it was hard to penetrate the Big Six’s reasoning, despite their repeated boasts of “transparency”. Maybe there are answers to the question from John Robertson, the abrasive Labour star on the committee, about why the dividends reflected the 23 per cent profits of the companies’ generating arms, while the price rises only reflected retail profits. But as the Tory MP Dan Byles pointed out, the companies’ structure and profits remained a mystery. “Would you accept that your accounting and reporting practices fail the basic tests of transparency?” he asked.
Despite its differences on a solution, the committee was united in its disdain for the companies. This was bolstered by the cuckoo in the industry line-up, Stephen Fitzpatrick, the volubly persuasive managing director of smaller independent firm Ovo Energy, who said he simply “can’t explain” the price rises and declared that “a lot of energy companies … are charging the maximum price they feel they can get away with.”
As the Tory Philip Lee put it: “There is a suspicion that you are a chorus line acting in concert.” Nobody used it, but it was hard to look at the Big Six without thinking of a good old fashioned word: cartel.