ANOTHER energy company has announced it is to make huge profits at a time when consumers are struggling to pay household bills.
• £1.4billion profit comes on the back of nine-per cent price hike for domestic customers
• Nicola Sturgeon calls for UK to enforce simpler and cheaper tarrifs
Scottish Gas owner Centrica has revealed it is expecting to make profits of £1.4billion this year - after introducing a six per cent increase in charges to customers.
The profit forecast comes after Perth based energy giant SSE announced half year profits of £397.5m at the same time as it introduced a nine per cent increase in charges for domestic customers.
And it has been reported that E.On, the only big six company which has not announced a price rise plans to increase its charges to domestic customers by 11 per cent in January.
A spokesman for E.on said newspaper reports of an 11 per cent rise in prices for its customers were: “sheer speculation.” He said: “No decision has been taken but we will honour our promise to customers not to increase prices before the end of the year.”
Although the true extent of Centrica profits will not be announced until January a shareholders meeting today was told British Gas profits would rise six per cent to £575m. Colder weather in 2012 was one of the things which energy companies say had boosted profits - saying the last ten months had seen a nine per cent increase in gas consumption.
Consumer organisation Which? has called for an urgent independent review into whether recent price rises are justifiable. Campaigners say the price rises will tip thousands more households into fuel poverty.
Deputy First Minister Nicola Sturgeon said: “Energy prices are a very serious and hard hitting issue for Scottish families and are a matter of great concern for this government. For every 5 per cent increase in energy prices, 46,000 households are pushed into fuel poverty.
“I am urging the UK Government to use the forthcoming Energy Bill to ensure that, at the absolute minimum, all consumers get simpler and cheaper tariffs. We have also been pushing Westminster repeatedly to take a firmer stance with energy companies to do more to help vulnerable people and ensure that our households are better protected.”
Ann Robinson, Director of Consumer Policy at uSwitch.com, said consumers were already struggling to pay their bills and would struggle to pay the higher prices which come into effect from tomorrow.
“This week the cold reality of winter price hikes starts to strike as British Gas customers face the sting of a 6 per cent increase on their gas and electricity bills. The increase will push the average British Gas dual fuel bill up from £1,260 to £1,336 a year – £76 a year higher.”
Labour Shadow Energy Minister, Rutherglen and Hamilton West MP Tom Greatrex, said: “People will not understand how the energy giants can get away with inflation-busting price rises this winter when they are already making huge profits.
“Energy companies always blame price rises on wholesale costs, but with prices and profits both up, customers have 1.4 billion reasons to ask whether Scottish Gas is really playing fair.”
The energy companies say increased wholesale charges are one of the main factors behind the price rises. However the Office of Fair Trading is currently investigating reports that the big six energy companies are involved in manipulating wholesale prices.
Trisha McAuley, Deputy Director of Consumer Focus Scotland, said consumers were increasingly sceptical about the big energy companies’ motives for increasing prices.
“Consumers have little confidence that the balance between wholesale energy costs, domestic prices and company profits is fair. The truth is that establishing whether this balance is fair has confounded regulators and government. This will be the trigger to get into the guts of the wholesale gas market and its relationship to domestic prices and establish whether consumers can have confidence in the price they are being asked to pay and the increases they are expected to bear.
“Consumers must be confident that the wholesale sale gas price and the retail energy price accurately reflect the market fundamentals of supply and demand, not the manipulation of derivatives traders looking to distort market prices for profit.”
Energy regulator Ofgem recently announced plans to force suppliers to inform householders about their cheapest deals and greatly simplify the number of pricing plans as part of what it is calling the biggest shakeup of the market for domestic energy for more than a decade.