Consumer backlash over British Gas profits

Parent company set to announce £2.8bn profit increase

The parent company of British Gas has risked fierce consumer backlash following reports that it is set to announce a 15% increase in profits.

Centrica plans to reveal the figures this week, which show the company has made a profits increase of £2.8bn following the British Gas price hike in October 2011. Centrica have tried to justify their profits by releasing a study that shows the company have had a beneficial impact on the UK economy in terms of jobs and tax payments, but that is unlikely to appease consumers who have been hit with rising prices.

Centrica has argued that its practices are good for the country, but that won't wash with consumers

(Image source - Metro)

Richard Lloyd, executive director at consumer champion, Which?, said, ‘At a time when spiralling energy bills are consumers’ top financial worry, people are bound to question whether they’re paying a fair price for their energy when they see big profits announcements from the energy giants. Centrica’s analysis won’t change that view as record-high bills land on millions of doormats in the coming weeks'.

The news will bring the pricing of energy bills into question again, as well the Government’s plans to reduce them. PM David Cameron announced earlier this year that all energy providers will have to simplify their tariffs and make sure consumers are on the cheapest one possible. However, many critics have argued these measures won’t go far enough and consumers will be confused as to which is the cheapest option.

EU’s emissions trading scheme ‘back on track’

Reforms aim to 'reiterate support' for scheme

The European Union’s system for helping countries reduce their carbon emissions is back on track despite criticism from Conservative MPs and business lobbyists.

The emission trading scheme (ETS) has been reformed to make it more effective and will be debated in the European Parliament sometime in April. However, there has been criticism from Conservative MEPs, two of whom defied David Cameron and voted against the reforms. There has been speculation that the reforms could end up being ‘watered down’ by the time they make it to the parliament vote.

The EST in its current form has failed due to low permit prices

(Image source - ABC)

In their current form, the reforms will hold back some of the EST carbon trading permits until 2019 in an attempt to stop the over-supply of permits and raise the cost of carbon emissions. The original scheme was designed to reduce the carbon emissions of countries by making them buy permits to allow them to release carbon dioxide into the atmosphere, with the view that the cost of permits would make countries want to lower their emissions and invest in renewable energy technologies. However, the scheme has been seen as a failure because of the low cost of these permits, along with the fact that many of them were given away for free. 

The reforms would introduce a system of ‘backloading’, which would hold back permits from auction for several years. Rob Elsworth, policy officer at the campaign group Sandbag, said: "The road to structural reform of the ETS starts with backloading. Today's vote puts us firmly on that road. What's more it reiterates support for the EU's flagship climate policy, the ETS. Abandoning it at this point would have left the EU with an even more politically charged debate around alternatives."

Backbench rebellion over energy bill?

'Decarbonisation target must be included' say MPs

Fears of a backbench rebellion in Parliament are growing following news that a decarbonisation target will not be included in the energy bill being put forward by the Coalition government.

Despite being seen as a crucial factor for climate change campaigners and supporters of low-carbon energy, any target on decarbonising electricity generation has been left out of the bill on the insistence of both the Chancellor George Osborne and the Prime Minister David Cameron. Tim Yeo, chairman of the energy and climate change select committee, is set to give a speech in the City this morning insisting that an amendment to the bill to include a decarbonisation target be brought forward when the bill reaches the reporting stages early next year.

The lack of a decarbonisation target is splitting Parliament

(Image source - The Guardian)

Yeo believes that a 2030 target to reduce carbon emissions from energy production is essential in encouraging investors to the UK and to give them certainty that the country’s long-term emissions-cutting targets are met. Yeo said that these issues were ‘a constant theme’ in his talks with investors, and believes that a specific decarbonisation target would ‘boost investor confidence’.

The Committee on Climate Change (CCC) has suggested that the target should be no more than 50g of carbon dioxide per kilowatt hour by 2030. Yeo said he would happily compromise with a target of 50 to 100g/kWh. The current figure is around 490g/kWh.

Another row over carbon targets is expected as Ed Davey, the secretary of state for energy and climate change, will announce the same day as Yeo whether the government will accept the advice of the CCC and include emissions from aviation and shipping in the UK's carbon targets. Many within the Conservative Party are opposed to this, but it would be damaging to the Liberal Democrats if Davey was to overrule the committee, the statutory body set up to advise ministers on how to meet long-term carbon targets, on this issue.