Brian Wilson: Are our electricity suppliers acting in Scotland’s interests?

ScottishPower chairman Ignacio Galan greets Nicola Sturgeon at the official opening of the firms new Glasgow HQ. Picture: PA
ScottishPower chairman Ignacio Galan greets Nicola Sturgeon at the official opening of the firms new Glasgow HQ. Picture: PA
Share this article
23
Have your say

I acted with uncharacteristic decisiveness this week. After ten years of reflection, I embarked on switching electricity suppliers, in common with more than 400,000 other people this month.

Every camel’s back is vulnerable to a straw. Mine came in the form of an email from SSE/Scottish Hydro which informed me that my stratospheric domestic bill would increase by another ten per cent over the coming year.

They generously advised that I need do nothing as they would adjust the direct debit. But another heading on my annual statement caught my eye: “Could you pay less?”, it asked, which was exactly the question I had in mind.

The answer was that “subject to availability”, I could switch from the Standard Variable Tariff to one which would create lower bills than in the year just ended. Without delay, I phoned the number provided.

“Ah,” said the voice of SSE proudly, “that tariff was withdrawn a few days ago. And it does say ‘subject to availability’.” I entered into unproductive semantics about whether “subject to availability” covers a circumstance in which there is absolutely no availability at the time the “offer” is made.

This won me promotion to a higher voice of SSE who agreed to refer my inquiry to some even more senior authority and revert. Two weeks later, the fateful call arrived. There was no change in their position. The glad tidings on how I might “pay less” were not for me. And I, finally, was no longer for SSE.

I went on to the Which? website and, having filled in a few details, was advised there are 256 tariffs across a plethora of suppliers which would save me money. I opted for a small Scottish-based supplier – not the cheapest but still offering impressive savings – and my new era as an active consumer has (I hope) begun.

The obvious question (not least from myself) is why I didn’t do this long ago? After all, I am supposed to know something about how the system works. The answer will be regarded as soppy or downright stupid by many but, believe me, there are plenty others in the same position.

I live in a very peripheral part of Scotland. No providers of a service are more highly appreciated than “the boys from the Hydro” who come out in all sorts of weather to maintain and restore power. In this part of the world, no company was held in higher regard than the public forerunner of SSE/Scottish Hydro.

It may be irrational to make any read across between these factors and loyalty to the commercial behemoth that is SSE. But people across the north of Scotland have done so for decades and change comes slowly. Remember that two-thirds of UK consumers have never switched, though most could save if they did.

A little knowledge of history is necessary to appreciate the incredibly strong position that the current owners of both SSE and ScottishPower were handed. In 1991, the Scottish electricity industry was privatised in an entirely different way from its English and Welsh counterpart.

In recognition of the public esteem in which the former state boards – SSEB and NOSHEB – were held, their privatised successors were left as vertically integrated companies, generating and supplying power. This meant they started with monopoly positions in Scotland, unlike the competitive market being trumpeted further south.

It has struck me over the years that there is remarkably little questioning of how they have treated Scotland in return for the uniquely privileged position they inherited and from which gargantuan profits have arisen. Like much of corporate Scotland, our power companies flourish by press release. Take the question of tariffs. Last December, Ofgem published a table of electricity suppliers and the proportion of customers on the most expensive Standard Variable Tariff. The UK average was 66 per cent, ScottishPower fared well on 50 per cent but SSE came in at an astonishing 91 per cent. Why?

What do customers think of them? A Which? survey of 23 companies places SSE at 15th equal and Scottish Power at 21st. None of the others benefited from the silver spoon which the Scottish businesses started life with. So how come they have slipped so far in public esteem and who is asking that on behalf of the consumer or the Scottish economy?

Nicola Sturgeon opened the new ScottishPower building in Glasgow this week alongside the head its Spanish parent, Iberdrola. The First Minister glowed with admiration for “an exemplar to our world-leading energy sector” though I doubt if her constituents in Govanhill would have been quite so enthusiastic.

Such testimonials should be tested rather than asserted. Neither ScottishPower nor SSE have built a single power station since privatisation. Scotland has been turned from exporter of electricity to importer. These companies have been the biggest beneficiaries of onshore wind subsidies – without building a single turbine in Scotland. I’m not sure that is such an “exemplar” record, even leaving aside what customers think of them.

Energy companies have huge lobbying power in Edinburgh and Whitehall. They are past masters at maintaining a mutual admiration society with the Scottish Government. As for Theresa May’s pledge to cap prices, the votes had hardly been counted before that was abandoned in the face of the usual threats from the “Big Six” utilities – who are not, of course, a cartel.

We are coming up for 25 years since privatisation took effect in Scotland. It would be refreshing (and therefore unlikely) if a Holyrood committee decided to launch a major review of whether the dominant position of the two vertically integrated companies still serves the best interests of the Scottish economy, as well as their record towards consumers. Framed that way, such an inquiry is well within Holyrood’s powers.

Meanwhile, we can all rejoice in the news that despite mislaying half a million customers since 2015, SSE’s retail profits increased last year due to “reduced wholesale energy costs”. Margins increased and, between that and the threat of a price cap evaporating, it was deemed essential to increase the pay of the CEO, Alistair Philips-Davis, by 72 per cent to £2.92 million. Alas, I will no longer be making a contribution.