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.

Linking offshore wind farms to grid will cost £17bn

Fears that development costs could lead to higher prices for consumers

Plans to link offshore wind farms to the grid may result in higher electricity prices for consumers, it has been warned by a committee of MPs.

The method of bringing power from offshore wind farms, and onshore ones, to land is very complex and has been a major obstacle in the development and expansion of the wind energy industry, as a heavy-duty transmission infrastructure has to be developed, which has left many wind farms waiting for long periods to be connected to the grid.

Currently, a licensing system is in place which allows transmission lines to be constructed by the National Grid and other developers, who are then given a guaranteed income for 20 years; a total cost of £17bn. However, companies can only be fined 10% of their income if they fail to meet obligations, which Margaret Hodge, the chair of the public accounts committee, fears will lead to higher prices for consumers. She said, ‘Not only is it unlikely that this licensing system for bringing electricity from offshore wind farms on to the national grid will deliver any savings for consumers, it could well lead to higher prices. Indeed the terms of the licences appear to have been designed almost entirely to attract investors at the expense of securing a good deal for consumers’.

Offshore wind farms seem to be a good source of energy, but getting to use this energy is costly

(Image source - The Guardian)

Ofgem, the energy regulator, responded to the MPs report by highlighting the fact that it was only able to cover the first four tenders for licences, and added that the competition for these licences had saved customers about £290m. They said: ‘Our objective is to ensure this necessary investment is delivered at a fair price. As with any new market, there are lessons from early transactions. The initial tenders were conducted under interim arrangements. "It has always been Ofgem's intent to refine the tender process to deliver greater efficiencies and further benefits to consumers’.

As has been said before, new forms of energy production will, in the short term, lead to higher bills to cover the costs of implementing these new initiatives, though it is expected that these renewable forms of energy production will lead to cheaper bills in the future. But what do you think? Are you willing to pay more now for cheaper bills later? Let us know your views in the comments below.

Are politicians really that out of touch with the public?

MPs calling for higher wages despite millions struggling with low pay and rising energy bills

Earlier this week, the results of a survey of 100 MPs were released, showing that 69% thought that their annual wage of £65,738 made them ‘under-paid’, with the majority of them suggesting that their wage should be at least £96,740.

Considering the expenses scandals of recent years, and the fact that millions of people are struggling to afford things like food, housing, energy bills and general living costs, the news that MPs think they are hard done by is just astonishing. It’s not just because of things like their second homes, their expenses and questions about how much they actually do (apart from major events, how often is Parliament completely full?), but because of the simple fact that so many ordinary, hard-working people are having to face higher living costs without any wage increases and are being told by these very MPs that they’ll have to just put up with it because of the UK’s economic situation.

Despite millions of people struggling with living costs, MPs also think they have it rough

These opinions aren’t just held by one party however. 47% of Conservative MPs and 39% of Labour MPs felt they were unpaid. Only 9% of Lib Dems held this view, but they thought that the ideal wage for a politician was around £78,000. Dave Prentis, the general secretary of Unison, Britain’s largest public sector trade union, said ‘The idea MPs believe they deserve a 32 per cent increase is living in cloud cuckoo land’.  Matthew Sinclair, of the TaxPayers’ Alliance, agreed, saying, ‘Hiking politicians’ wages at a time of pay freezes, benefit caps and necessary spending cuts would be completely unpalatable to taxpayers.

Some MPs have tried to defend their responses, as one wrote in the anonymous comments of the survey that people have ‘no idea’ of ‘the pressure, breadth of knowledge and social skills that are required to do the job’.  If MPs feel they are unpaid, how do they think they rest of the country feels? Didn’t they think about the reaction of the public to their survey responses? Do MPs seriously believe a family struggling to make ends meet, who are have to face turning off their heating to afford to eat, or a graduate who can’t get a job despite having a first-class degree, would think ‘You’re right, £65,000 isn’t anywhere near enough for a politician’?

A lot of MPs seriously seem to have no idea what everyday life is like for a lot of people in Britain, and the results of this survey just show how out of touch they are with the British public by not seeing the irony of telling people to accept pay freezes, lower wages and higher energy bills whilst demanding higher pay for themselves. 

Parents turn off heating to feed kids

New figures show how fuel poverty is rising

One in four families are having to turn off their heating to afford to feed their children due to rises in energy bills.

A survey conducted by the Energy Bill Revolution campaign has revealed the startling figure, along with others that highlight just how much fuel poverty in the UK is rising. According to the results, 45% of adults are using blankets and extra layers to keep warm, and nearly half of parents are turning the heating off whilst their children are out. Another shocking figure shows that a fifth of parents claim their children have been getting ill more regularly due to living in a colder house.

The cost of heating is starting to get too much for many families

(Image source - Metro)

The survey was aimed at 1000 members of the Netmums website, with 88% of them stating they more concerned with energy bills now than they were last year. Sally Russell, the founder of Netmums, said 'With almost nine in 10 families now rationing energy use due to spiralling prices, this signals a new winter of discontent for British families.'

Fuel poverty is an issue that has started to affect more and more people and is something Home Reheat has regularly discussed, with recent articles looking at how nearly 300,000 homes will be dragged into fuel poverty this winter and how elderly people will be hit the worst. 

Winter is coming!

Temperatures set to hit 100-year low

You may have already noticed when you went to work this morning with three layers on and spent 20 minutes trying to defrost the car, but winter is here.

Temperatures have plummeted this week and are set to drop even further throughout December, with temperatures estimated at minus 3C in many places, and even as low as minus 20C in some northern areas. 

As has been in case during the last few winters, there are fears of snow blizzards closing roads and train lines, causing chaos for travellers during the festive period. Experts have also expressed concerns that the torrential rain, that has devastated many areas of Britain this week, will return early next month, hampering recovery efforts of those who have been flooded.

Snow has already hit mountainous areas, and could be on its way to the rest of us

(Image Source - The Daily Mail)

So, with temperatures dropping, now would be the time to crank up the heating. But many people are set to go without heating for extending periods over winter due to the increases in energy bills. If only there was a way to utilise and make the most of all of the heating you pay for…

Luckily, there is!

Our innovative Home Reheater recycles the warm air in your home (particularly the heat trapped in your ceiling as it naturally rises) and recirculates it back down to the rest of the room. This allows you to turn your heating down to a lower temperature and still stay warm, as the entire room will remain at one constant temperature, instead of the ceiling being the warmest, as is currently the case in homes across the country.

So there are three options this winter; turn your heating up and face the costs in the New Year, turn it off and stay horribly cold all Christmas, or invest in a Home Reheater and stay happily warm, whilst reducing your heating bill at the same time. Surely the answer is obvious?

Go to our website now and look at the 16 different designs available to find the one that suits your home. With its simple installation process your product will be up and running and saving you money in no time. And at a cost of just £39.95 it is a cheaper alternative to paying over the odds for heating that you'll only waste as it rises to the ceiling.

So stay warm and get your own back this Christmas with

Homes set to ration energy

As average bills increase, many plan to go without heat this winter

Despite temperatures set to hit a 100-year low this winter, many people will ration their heating due to price rises.

Figures show the average heating bill has increased by 63% since 2008, putting millions in ‘fuel poverty’ and leaving them with the choice of paying for heating or having money for food. Last winter, around 75% of people asked said they would turn the heating down at key times, even if they were cold, just to save money. This year, nearly 90% claim they will do this, with elderly people more likely to go without heating.

Elderly people will be hit harder by rising energy bills over winter

(Image source - This Is Money)

This is why there is worry, as it is feared many elderly people, who are more likely to stay at home for longer periods thus using more heating, might die as a result of the cold, especially those without family who live alone. There were 25,700 ‘excess winter deaths’ last year in England and Wales, with around 2500 of them said to be as a result of ‘fuel poverty’ (where over 10% of income is needed to cover energy costs).

Energy comparison site uSwitch.com believe that further the price increases that were announced by the ‘big’ energy companies like British Gas and Scottish Power last month will ‘add £753 million onto energy bills and push another 314,000 households into fuel poverty’.

Have energy companies been rigging prices?

PM threatens heavy fines for companies found to be manipulating market

David Cameron has called for heavy fines against all energy companies that are found to have rigged gas prices in the UK. 

The Prime Minister’s view comes after the Financial Services Authority announced an investigation into several major power companies that are accused of manipulating the wholesale gas market in Britain. Nick Clegg, deputy prime minister, backs Cameron’s stance, saying that consumers would be ‘rightly dismayed’ if the allegations of price rigging are found to be true.

Many of the companies accused of price rigging increased their prices last month

(Source - The Telegraph)

The FSA launched their investigation after word of ‘unusual trading patterns’ was revealed by whistle-blower Seth Freedman, who worked as price reporter at ICIS Heren, a company who set benchmark prices that wholesale gas contracts are based on. ICIS Heren reported to energy regulator Ofcom concerns about suspect trading on 28th September, which is the date of the end of the gas financial year and therefore an important influence on future gas prices.

This investigation will do little to improve the strained relationship between the energy companies and their consumers, which was already damaged following last month’s gas price hike.

Energy prices hike increases inflation yet again

Rate had actually gone down but will rise by the New Year

The recent increases in energy bills from companies like British Gas and Scottish Power have caused the rate of inflation to rise once again.

The Consumer Prices Index stood at a three-year low level of 2.2% in September, down from 2.5% in August. However, with nearly all of the big energy companies in the UK increasing prices over the past few days, the figure is likely to increase soon to around 2.6%, meaning that by the New Year the cost of living in Britain will once again be higher.

For the full story, click here to go to the Evening Standard’s website.