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Fury as energy bosses scoop 'obscene' £9billion windfall but STILL raise fuel bills to record high
Last updated at 00:52am on 20.01.08
Alistair Darling: Despite the 'obscene' windfalls, the Chancellor has rejected calls for a super tax
Energy suppliers were attacked yesterday for scooping a £9billion cash windfall at the same time as driving fuel bills to record highs.
MPs, consumer groups and poverty action campaigners described the bonanza as obscene.
The windfall comes from a complicated EU initiative called the Emissions Trading Scheme, designed to reduce pollution.
The electricity generators have been given 'permits' to emit climate-warming gases between 2008 and 2012, the second phase of the scheme.
Despite not paying for the permits, they have raised the price of wholesale electricity to reflect their supposed cost.
Ofgem, the energy regulator, estimates the firms will make about £9billion from this.
Their extraordinary payday comes as a typical family's typical fuel bill has almost doubled over the last five years to £1,000.
Some four million Britons are living in "fuel poverty", defined as those who spend more than 10 per cent of their income on fuel.
Over the last fortnight, two more energy companies have stung customers with inflationbustingprices rises of up to 27 per cent and Ofgem has urged ministers to use the windfall to help those struggling to pay their fuel bills.
But Chancellor Alistair Darling, who met Ofgem officials on Tuesday, is rejecting calls for a super-tax. It would be similar to the windfall tax imposed on privatised utilities after Labour's election in 1997.
Energy companies including the German- owned Npower, which raised its prices a few days after Christmas, fiercely oppose the move.
Liberal Democrat leader Nick Clegg said: "It is totally wrong that the companies should be given a licence to print money on this scale.
"Electricity companies, which are already pushing up prices, should not be gifted with £9billion.
"With 25,000 people predicted to die from the cold this winter alone, the Government must act on the recommendations of its regulator.'
Alistair Buchanan, chief executive of Ofgem, said: "We said, 'Look, there's a £9billion windfall there and you could somehow take part of that to pay for your programmes for the fuel poor'."
A spokesman for independent conbeensumer group Energywatch said: "How can Ofgem tell the Chancellor that the market is sound and then in the next breath say there is £9billion of unearned income sitting there that could be super-taxed without their heads spinning?"
Labour MP Elliot Morley described the profits as "obscene" in the Commons last week.
Yesterday The Fuel Poverty Advisory Group said the money was urgently needed to help the vulnerable forced to choose between heating and eating.
Chairman Peter Lehmann said: "The permits should be auctioned and the money should be recycled to help millions of struggling families."
The energy companies which own coal-fired generators, such as Npower and Scottish and Southern Energy, defended their position.
A spokesman for Scottish and Southern insisted: "For us, there has no windfall. We have passed on the benefits of the carbon permits in the form of a fair and responsible approach to pricing."
A spokesman for Npower said: "To start an emissions trading scheme with no free permits would have added huge extra costs to our power stations and had a destabilising effect on the system."
The Government has pledged to eradicate fuel poverty by 2016.
A Treasury spokesman said: "Decisions on tax policy are a matter for the Chancellor."
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Gas is widely expected to reveal a price rise today of as much as three times inflation, experts warned.
The move will be a devastating blow for many of the company's 15million customers already struggling to pay their bills.
A rise has been almost inevitable, however, since two rival firms --Npower and EDF Energy - raised their prices in recent weeks.
Experts said last night that British Gas could put up the cost of both gas and electricity by around 15 per cent.
In some parts of the country, the increase could be even steeper. Inflation is running at four per cent according to the retail prices index.
It would be the third time in less than two years that the firm has increased prices, although it cut them once last year.
A typical "dual fuel" customer pays £912 a year for gas and electricity, compared to £567 in 2003, a 60 per cent jump.
Gordon Lishman of Age Concern, said: "Despite their healthy profits, we are really disappointed that the big energy firms don't think they can afford to put off these increases until after the winter.
This is when the poorest pensioners worry most about their bills."
Reader views (7)
In view of the way the Brown's Labour Government is slavishly toadying to the energy industry's corporate fatcats at the expense of the rest of us, (see above story) perhaps we (the ripped off consumer) might re-name Brown's Party as the "New Lobby Party".
Privileged lobbying by multimillionaire business interests should have no place in a parliamentary democracy in which the voice of the electorate is drowned out by the inducements of sleaze in all its many forms.
Take a look at the present Cabinet and ask yourself... "Who, among this lot, has not done his or her bit to ringfence, protect and enhance their own pensions, salaries and perpetuate the unaccountable aspects of "MP's expenses" that are, I believe, still beyond legal accountability?
If the energy industry lobbyists are allowed to keep their unearned 'bonuses' while we are being pushed into the next poverty level, then let us consider a radical alternative Government when General Election time comes.
If corporate parasites realise that their greed will induce new and radical government (of left or right) they may learn to be grateful for what they now have, rather than face compulsory nationalisation.
- Robbie Hugh, Stamford, Lincs
What's the point of regulators if they can't actually regulate in a meaningful way - there also a waste of taxpayers' money. In this day and age people not being able to afford heating or food is an absolute disgrace and what's worse is the government does nothing except blow hot air and allow these corporates to get away with daylight robbery. All you need to look at is the amount of profit these companies make - how much is enough?
- A Moghal, London
I wish Darling would get his eyebrows plucked.
- Ollie, London
What do people expect? These are private companies whose job is to make profits for their shareholders. Providing a value for money service for their customers is definitely a secondary concern. Privatising services such as electricity and gas which require a national infrastructure and are thus natural monopolies was bound to result in a bad deal for the consumer. Profits come before service.
- Mick, London, England
With global warming leading to milder winters, utility companies have seen their bumper seasonal profits shrink due to reduced consumption. They will continue increasing prices to make up for that.
- John, London, UK
So let's clarify this. The energy companies have increased their wholesale prices due to the fact that they have had to 'purchase' energy trading permits. However the permits don't actually cost these companies anything.
So why have the prices risen?
- Adam, Harrow, UK
"Decisions on tax policy are a matter for the Chancellor."
God help us then, he doesn't seem to know his gluteus from his humerus.
- Anon, London
