The real solution to rising gas and electricity bills

Want lower energy bills? Nationalise utilities!

EDF Energy announced that its prices will be increasing by 10.8% per fuel today, making them the 5th of the “Big Six” energy companies to increase their prices this year. With reports that fuel poverty (where a household spends more than 10% of its annual income on fuel bills) is going to continue to increase, as it has done year-on-year since 2003, this news is hardly a surprise. A study from Poverty UK has shown that currently 6.3 million households are in fuel poverty, including over 40% of the poorest fifth of people in the country, and that pensioners and single parents are disproportionately affected. The effect that fuel poverty has, particularly on pensioners and low-income families, is terrifying; during winter 2010-11 over 2,500 deaths were directly linked to fuel poverty and many people are now in a position where they have to decide whether to eat or heat their homes.

The nature of this issue turns from terrifying to despicable, however, when you look at how energy companies are performing financially. Every one of the “Big Six” (British Gas, Npower, E.On, EDF, SSE and Scottish Power) reported eye-watering profits in 2011, with their parent companies making anywhere between £1.3 billion and £2.3 billion profit over the last 12 months. What’s more, many of these companies, such as British Gas and E.On, are currently laying off staff or enforcing pay freezes as cost-cutting measures. In this years Budget Tory Chancellor (and contender for the title of World’s Most Punchable Face) George Osborne has attacked green taxes and announced that he will be backing energy companies looking to build gas-fired power plants by cutting Emissions Performance Standards, meaning that the energy giants will be able to produce gas and electricity more cheaply whilst hiking prices and cutting jobs. As a reward for driving pensioners to an early grave and throwing hundreds of people on the dole queue, the chairmen (and they are all men) of the Big Six each earned at least £1million last year. We truly are all in this together….

So, you ask, what can we do to curb the effects of this years price rise and the certain death it means for thousands of people across the country? Well, OFGEM has recently published plans for a “simpler, clearer and fairer energy market for consumers.” Here’s what they had in mind:

SIMPLER CHOICES

Ban on complex multi-tier tariffs and scrapping of uncompetitive dead tariffs*

All tariffs shown as a standing charge and single unit price

Limit on number of core tariffs each supplier is allowed to offer

 

CLEARER INFORMATION

All consumers given their supplier’s cheapest tariff on their bill

A Tariff Comparison Rate to compare tariffs ‘like for like’ across the market

New personalised information to help consumers find their best deal

FAIRER TREATMENT

Fair treatment to be enforced by standards of conduct backed by fines

Consumers to default to cheapest tariffs at the end of fixed term contracts

Ofgem to consider ways to promote more collective switching

That all sounds very good, but it doesn’t stop the cause of the problem; rising gas and electricity prices on the wholesale market. In an article on the website moneysavingexpert.com Phil Bentley, the Big Boss of British Gas, gave us a very simple-to-understand breakdown of where the money from our utility bills go:

As you can see, energy companies only make about 5% profit on our energy bills. Don’t get me wrong, 5% of a fuckton is still a helluva lot, but, and it pains me to say this, Bentley’s right. Energy companies, on the whole, aren’t behaving outrageously or gambling with our money, they aren’t ripping us off, they’re just making a reasonable profit on what they sell. The redundancies they’re making and the tax cuts they receive are simply part of an economic exercise to help energy companies do what they’re designed to do, make more money. So then, what difference will making tariffs simpler or encouraging collective bargaining have on the publics gas and electricity bills?

In short, little to fuck all; it’s not lack of competition that’s behind Britain’s increasing fuel poverty, but the profit-centred nature of the energy market. Whilst private companies who have to turn a buck are responsible for keeping our homes warm and our lights on we will continue to see prices soar, with the most vulnerable sections of society hit hardest. If we want to see a drop in energy bills, if we want the elderly and the poor to be able to heat their homes AND eat three times a day (what luxury!), we need to nationalize all UK energy companies.

To be clear, I’m not talking about the same kind of “nationalisation” we saw in the banking sector; these companies should be run by the public, without compensation to the super-rich who make millions out of a basic human need. With their money, infrastructure and assets we could ensure that every single person could live comfortably in their own homes, cut carbon emissions, create jobs and drive forward the renewable energy industry.

Rant over, thanks for reading.

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