British Gas reports a 500 per cent rise in annual profits, even as it slaps a 15 per cent hike in charges on its customers. Its parent company, Centrica, explains that its profits reflect unusually beneficial conditions in the first three months of last year. In the rest of the year trading conditions were much worse; this is why we have to pay so much more.
Now it should be no secret to anyone that energy prices overall have soared. Higher consumption in the emerging economies, a global shortage, and the tardy development of new gas fields and oil pipelines can all be blamed. But British Gas customers have every right to ask whether this was really how the free market was supposed to work.
We are continually advised to "switch" to keep the bills down, but should we really be expected to change suppliers every season or risk being gouged if we don't? The apparent mismatch between British Gas's profits and its pricing is the sort of thing that gives deregulation a bad name. The relatively small difference between the complex tariffs set by many other suppliers only increases misgivings among consumers.
There is certainly good reason for the regulator, Ofgem, to subject British Gas, and probably other companies, to greater scrutiny. Ofwat showed what a robust regulator can do when it levied swingeing fines on Thames Water for poor service. The truth is, though, that we will probably have to get used to higher prices for gas and electricity as global demand increases, and we have one partial remedy to hand. We must become better stewards of natural resources and less profligate in our usage.Reuse content