IN THE MONEY

Here we go again; British Gas has announced increases to the gas and electricity prices it charges customers. The company (a member of the ‘Big 6’ energy cartel) has announced that it will raise its charges for both gas and electric by around 6%, which will add around £80 a year to the average dual fuel bill, from the 16ht November 2012. This not unexpected decision follows SSE (which trades as Scottish Hydro, Swalec and Southern Electric) announcement that it will increase its domestic gas and electricity prices by an average of 9% from 15 October.

SSE (also one of the ‘Big 6’) has blamed the increases on the extra cost of using the gas and electricity networks and rising costs in energy wholesale markets. Around 3.4 million gas and five million electricity customers will be affected with an average standard dual-fuel bill will pay an extra £102 for the year, or £1,274 in total. Back in May 2012, British Gas, reported a 2% rise in annual pre-tax profits to £1.33bn, though profits in its division which supplies electricity and gas to homes and businesses fell 20% to £321.6m.

Npower has also joined its fellow cartel members (sorry colleagues) British Gas in and SSE by announcing it is increasing gas and electricity prices in the UK. Npower announced that it will increase the price of gas by an average of 8.8% and electricity by 9.1% from 26th November. And then there were three…

In 2011, all the big-six energy suppliers raised their prices, in some cases twice. Earlier this year the ‘Big 6’ all staged a token gesture round of small price cuts, which affected their gas or their electricity customers. SSE cut its gas prices by 4.5% in March this year. British Gas last raised its tariffs in August 2011, gas prices rose by 18% and electricity prices by 16%. Back in January 2012, it cut its electricity prices by 5%. Centrica (which owns British Gas) in May 2012 warned that continued increases in the wholesale price of gas might lead to renewed domestic price rises this autumn.

The silence from the Con Dem Government is almost deafening. Truly we have come a long way from the heady days of opposition, when back in October 2009 the then Tory Energy Spokesman, Greg Clark  (currently Financial Secretary to the Treasury) said that the "cartel" of the big 6 energy firms would be referred to the Competition Commission by an incoming Conservative Government. The then Tory Energy Spokesperson also condemned the unacceptable lag between the cost of wholesale gas prices and household energy bills - noting that customers were on average being charged some £74 pound too much for their energy per year.

An 'independent' investigation into the Energy companies refusal to pass on reductions in wholesale energy prices to customers would have been very welcome along with the promised 'Energy Revolution' to overhaul the energy sector billing structure and charges. Oddly enough a Conservative Government started the whole sorry mess in the first place, privatising the energy market in the first place. This threw any rational energy pricing structure upon the whims of the 'market' by allowing the newly privatised energy companies to price gouge customers in the first place?

Oddly enough that pre-election pledge for an independent inquiry into the £25 billion-a-year energy industry which has been subject to lengthy and repeated criticisms surrounding accusations of profiteering on electricity and gas, was quietly dropped by the Com Dem Coalition Government. Heaven forbid that principle get in the way of profit. No doubt in the next few weeks the other cartel members will feel duty bound to roll out energy price increases to their customers, I mean you have to keep the dividend up somehow and keep the shareholders happy.

Few of us this winter will have as snug and cozy a relationship with the energy companies as that which exists between the political parties within the Westminster village (and without) and the energy supply companies. Prior to the last Westminster general election, the Conservatives and the Liberal Democrats made repeated criticisms (and much political capital) from New Labour for its failure to tackle prices charged by the Big Six suppliers and repeatedly demanded an inquiry by the Competition Commission.

Sadly any faint hope that an inquiry into the nefarious activities of the energy supply cartel which might have had the power to reform the industry, encourage new entrants to break the hold of the Big 6 on the nominal free market and even possibly impose price caps quietly died in the summer months of  2010. Perhaps there should be an inquiry into the dubious (and financial rewarding) relationship between the Westminster based political parties and the representatives of the energy supply companies who are pretty keen to shower enough goodies around during Party conference season (and beyond) – perhaps not?

TIBERIAN LOGIC OR SYMANTICS AND DIVIDENDS

The Roman Emperor Tiberius, discussing the raising of tax revenue from the imperial provinces said "It is the duty of a good shepherd to shear his sheep, not to skin them." Certainly when it comes to the current unscrupulous activities of the energy cartel members, it is pretty clear that we are all being skinned if not properly fleeced.

By now most people should be aware that British Gas owner Centrica has reported operating profits of £1.3bn in the six months to 30 June, down 19% on the same period last year. The Centrica results also include a 54% fall in operating profits at its residential energy division, British Gas, to £270m.

British Gas not surprisingly says that higher wholesale gas prices are responsible for the fall in profits. By coincidence British Gas is prepares to raise gas prices by 18% and electricity prices by 16% in August. The BBC suggests that this increase will push up the average bill for around nine million customers by £190 a year.

British Gas getting its retaliation in early has said that it has been selling gas at a loss since April due to the rising cost of gas on the wholesale markets. They also say that the core business of home gas supply British Gas has lost customers and lost market share when compared with the same period last year.

Customer accounts for gas were down 0.7% from last year and market share down 0.5%, though it picked up customers for electricity supply. Oddly though British Gas did record an increase in total customers in the same period up 159,000 to 16.1 million accounts.

Centrica (British Gas's parent company) is a major gas producer and sells gas on the wholesale market and reports increased profits from operations, which include production in the North Sea and Trinidad, which increased by 14% to £414m. British Gas is one of the 'big six' energy companies (basically an energy cartel) which control 99% of the UK energy market leaving scant opportunities for any new small energy producers - so much for the free market?

Any chance of regulation on unsavoury business practices and cartel like behaviour from the Con Dem Government - I suspect that hell might freeze over first!

PROFITS BEFORE (FUEL) POVERTY?

Perhaps they thought is was a good day to bury bad news, what with the News of the World / News Corp scandal raging to quietly announce yet another rise their prices and boost their profits. News that British Gas have decided to increase their profits by increasing their domestic customers bills should not shock us. The members of the energy cartel have long put the dividend and their profit in advance of any fears of putting people into fuel poverty. That's the price we all pay for the alleged 'free market' in energy supply.

For the record:

• Scottish Power will raise their gas prices from August 2011 by 19% (electricity prices will rise by 10%
• EDF (who incidentally owe the French Government some 44 billion euros) raised their gas prices by 6.5% and their electricity prices by 7.5% in March 2011
• NPower raised their gas prices by 6.5%  and their electricity prices by 5.1% in January 2011
• Scottish and Southern raised their gas prices by 9.4% in December 2010

Some 9 million British Gas customers will see their gas bills rise by some 18% next month - they will also face a 16% (on average) rise in the cost of their electricity. They (British Gas) even admitted that there was little point in people trying to change suppliers as the other members of the energy cartel are likely to raise their prices as well.

With some customers facing a 24% rise in their gas prices, many will face a rise of nearly £190 in their annual dual fuel bills. With according to uSwitch.com some 6.3 million households across the UK in fuel poverty this is not good news. With a painfully weak Con Dem Government on Westminster who dropped any ideas of investigating the energy market last year what hope have the ordinary energy consumers have of fair energy prices? None as far as I can see...