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Janice Small: Britain needs to take back control of its energy

Janice_smallJanice Small, a press and marketing consultant and member of the candidates list, says foreign energy companies such as EDF are making money out of British consumers and pensioners whilst getting subsidies from the French Government.

In light of the recent hikes in energy prices, let’s take a look at who owns the energy companies supplying the UK and who is profiteering from our misery and why OGFEM is a toothless beast and should be scrapped because an energy cartel is alive and well in the UK, fleecing us, the consumers.

Facing accusations of operating a price fixing cartel, Britain's six biggest energy companies (British Gas, Scottish & Southern Energy, EDF, E.ON, Scottish & Npower) agreed to disclose the minutes of its board meetings which are held every two months following OFGEM's investigation into price rises which started in January.  All have denied that they discuss the pricing or product strategies at these meetings.  The allegations followed the raising of prices by Npower, EDF and British Gas within two weeks of one another - a classic sign of 'price fixing'.  There are concerns that under the auspices of Energy Retail Association meetings, members agreed on matters such as price fixing through the raising and lowering of tariffs within weeks of one another.   

On January 4th Npower dramatically raised its prices stating that its customers would have to pay an average of 12.7% more for electricity and an extra 17.2% for their gas.  On January 15th, EDF Energy announced that it would be putting up its electricity prices by 7.9% and gas prices by 12.9% that week.  On January 19th, British Gas announced that 13m of its customers would see their electricity and gas bills rise by 15% each with immediate effect. 

It blamed the increases on rising wholesale energy prices, but the figures come just days after analysts suggested the company made a record £40 profit from each customer last year.  Alistair Darling, the Chancellor, had already written to regulator OFGEM, amid fears it marks the first of many energy bill increases throughout this year creating further misery for householders, all blamed the rise on the "soaring cost" of wholesale energy, higher distribution costs and increased environmental obligations. 

A damning report published by the Parliamentary Ombudsman last October showed that the tax credit system is "unfair" to some of the UK's poorest families, as the in-built component of over-payment and 'harsh' recovery tactics of HM Revenues and Customs (HMRC) pushed some 363,000 families into debt.

The total number of UK customers disconnected for non-payment of their energy bills rose sharply from 2,913 in 2005, to 5,117 in 2006.  The Debt and Disconnection Review, heavily criticised the German-owned energy supplier Npower for cutting off twice as many customers for non-payment of bills as its nearest rival.   OFGEM said Npower, which recently announced a 19% increase to gas bills, is not doing enough to help customers who struggle to pay their bills.   

A YouGov poll conducted as part of The Sunday Times investigation (see stories here and here) into energy cartels found that 85% of customers believe they are being 'ripped off' by the energy firms.  This is in comparison to 76% of people who felt they were being ripped off by the railways; 74% by the petrol companies and 59% by the banks and financial service industry.

Who is holding us to ransom and making huge profits?

  • EoN is German owned and is claiming to be the world’s largest energy supplier. It reported a 42% increase in profit for the year ended 2007, paying shareholders Euro2.6bn. 
  • EDF Energy plc (owns London Electricity, Seeboard and SWEB. Also supplies the power to Sainsbury's Energy.) Its chief executive is French. Owned by EDF of France. Dividend payment to parent company in 2006 was £105m, £96m in 2005.
  • RWE Npower plc. More usually referred to as Npower. Chief executive British. Owned by German company (RWE). Dividend payment to parent company calendar year 2006 was £37m, 2005 nil.
  • Scottish Power. Taken over by Iberdrola of Spain late 2006. No dividends yet paid to new owner. European board structure recently set up. Senior directors on supervisory board appear to be mainly British.
  • Scottish and Southern Energy (owns Atlantic Electric and Gas, Scottish Hydro Electric, Southern Electric and Swalec). It's chief executive is British and it is a 'normal' UK plc. Dividend paid in year ending March 2007 £411.3m, previous year £378.8m.
  • Centica plc. Owns British Gas amongst several other companies. It appears that British Gas figures are included as British Gas Residential in the group figures rather than as a separate company. Centrica is a normal UK plc. Chief executive is British. Centrica dividend in calendar 2006 was £384m, £340 million in 2005.

Britain's biggest energy companies are expected to announce profits in excess of £4.5bn. 

In the 1980s I applied for shares in the utility companies, was seduced by ‘Sid’ and firmly believed that privatisation was the way forward.  And so it was for a few years.  In the intervening period no Government has made provision for energy security, allowing UK firms to be swallowed up by foreign owners whose loyalties lie with their shareholder and not UK plc.  Nuclear was shunted into the sidings as an unpleasant, unpalatable and politically sensitive solution to our energy needs.  We are now resolved to nuclear power but it will be too little too late as most of the home-grown nuclear engineers are either retired or have decided on alternative careers such as my friend who designed nuclear power plants around the world.  He now designs Japanese water gardens.  I suggested to him that now the credit crunch had kicked in perhaps he might take up his former profession.

OFGEM has proved useless.  The European Union is proving more effective at taking to task the cartel operated by the energy companies with EDG being subsidised by the French Government.  UK MEP Edward McMillan-Scott has asked the European Commissioner for Competition, Neelie Kroes, to open an inquiry into whether the 'big six' have been secretly colluding to fix prices and dominate the market.   

And, to add insult to injury, Gordon Brown has also agreed that the French are to build our new generation of nuclear power stations.  Have we learned nothing from foreign ownership of energy?   I take the localist view – take back our energy needs from the foreign owned conglomerates even if it means re-nationalisation for the time being.  Otherwise, the lights will be soon be going out in Britain.


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