Power firms say energy sales 'unprofitable'

LEADERS of major power firms faced claims of "profiteering" as they appeared before MSPs to explain recent price hikes.

Some complained that they don't make money in power supplies, despite overall profits running into hundreds of millions of pounds in recent years.

But they admitted they are "public enemy No1" when prices go up.

ScottishPower announced a 19 per cent hike in gas bills earlier this month. The firm, along with representatives from Scottish and Southern Energy, British Gas, Npower, E.ON and EDF, faced questions at Holyrood's economy committee yesterday.

Nationalist John Wilson pointed to the 3 billion profits - up 50 per cent - at British Gas last year, while Scottish and Southern Energy made profits of 1.2bn.

"There's an onus on companies to explain why these prices are going up and what is the match between prices going up and the profits that are being made," he said.

"The difficulty that I and many consumers have is that if you aren't profiteering at the expense of consumers, then who are you making profits from?"

Alistair Phillips-Davies, a director at Scottish and Southern Energy, said consumers are "at the forefront" when charges are being considered.

He added: "My name's going to be on the bottom of the press release and I'm the one who's going to be public enemy No1 when that day comes."

The power firms insisted that the massive profits are made by their group as a whole, but claimed the rewards from energy supply alone are less lucrative.

Paul Williamson of Npower said current prices indicate there is no money in energy supply.

"We've not made any profits in the past couple of years and the segmental profits will show this," he said.

It was 226 million down on the supply side in 2009, but had overall profits of 396m.

Rupert Steele, ScottishPower's director of regulation, said earnings were down in the first quarter of 2011.

"Across the supply business, the actual selling of electricity and gas to consumers, we were making around 10 a year on a 1,000 bill over the last two years, 2009-10.Since then, there has been a very significant increase in wholesale prices, especially from March when we had the Arab Spring and the instability in markets."

But the firm still made 142m from energy supply in 2009, and 761m in total profits.

Nationalist Chic Brodie also pointed to "significant increases" in salary levels, with one executive seeing his salary jump from 429,000 to 812,000.

ScottishPower, British Gas and Scottish and Southern Energy dominate the Scottish energy market, with 86 per cent between them.

Scottish Green Party co-leader Patrick Harvie said: "We've heard a defence of high remuneration at the top end that I would expect to hear from RBS, and we've heard one implication that one group of people who should be happy with a whopping increase in standing charges are pensioners.

"I suspect if any one of us replied to a constituent on that basis we wouldn't be doing ourselves any favours at all."

Mr Phillips-Davies later said that Scottish and Southern Energy is investing about 3.5bn in renewables to ensure future supply.