Energy firms making £105 profit per customer
March 26, 2010 at 2:03 am
Ofgem has revealed that energy firms are now making £105 profit per customer, over £30 more than they were back in November. This news comes amidst continued frustration at the refusal of the main energy companies to reduce their bills despite the drop in wholesale prices.
Customers have seen little benefit from the fall in wholesale prices, and the news that the profit margins of the main power companies are at a five-year high is not going to do anything to help matters.
The figure of £105 is the profit that is being made from the average dual-fuel customer, according to Ofgem. This represents a rise of 40% over the last three months and is unacceptable for many.
Ed Miliband, the climate change secretary, said the report shows that “energy companies need to cut their prices”. He commended British Gas for recently cutting its bills by 7%, but called on all suppliers to pass on the benefits of the lower wholesale prices to their customers.
The energy providers have hit back at the claims. They have funded their own report that concluded they are making less than £31 profit a year on each customer, much lower than the Ofgem figure.
The news has not been helped by the fact that British Gas just revealed record profits for the year, seeing a 58% rise in profits to £595 million. This is sure to anger many customers, and we will have to wait to see whether the energy companies will take any notice now and start to lower their bills further.
E.ON latest to announce price cuts
March 19, 2010 at 4:20 pm
It seems like the big power companies are finally starting to get the message that their bills are too high. After first British Gas and then Scottish & Southern reduced their bills, E.ON has followed suit by cutting its own bills for domestic customers. The company claims that the reduction will lead to a 6% decrease in the bills of affected customers. It marks the third cut by E.ON in the space of a year.
This latest reduction means that domestic customers of E.ON will now be receiving an annual gas bill that is, on average, £42 lower than before. E.ON also confirmed that its customers would save an average of £26 a year compared to British Gas customers. The new price cuts will come into effect on March 31.
This is great news for energy customers, who have long been complaining that the energy companies are not doing enough to cut their bills despite the huge reduction in wholesale energy prices over the last few months.
The managing director of E.ON, Graham Bartlett, said that he was “pleased to see the opportunity to now reduce prices”, adding that the company has been “very aware of the effect of both the recession and the exceptionally cold winter” on its customers.
In response to the claims that energy companies are not doing enough to reduce their bills, he said that the wholesale prices were “only part of the pricing story”, claiming that customers were using gas that had been bought by the company over the years at higher prices.
As fixed deals end, energy hikes await
March 19, 2010 at 4:18 am
There seems to be no end to energy price woes in the UK at the moment. Although British Gas did admittedly reduce its bills recently, prices still remain prohibitively high for many customers. Now many customers on fixed-price deals could be about to get a nasty shock when their deals come to an end in March.
There are six major fixed-price deals that are ending in March. According to uSwitch.com, some of these customers could find themselves having to pay bills of up to £258 extra a year as a result.
The comparison website highlighted E.ON’s capped deal due to end in March. The average user on this deal currently pays £974 a year for both gas and electricity. But this could rocket to £1,232 overnight when the deal ends.
Looking at all the plans that are ending, uSwitch states that the average bill is likely to go up by £139 per year, which is still a huge hike.
The reason behind the large and sudden increase is that most of these deals began four years ago when energy prices were very different from what they are now. According to uSwitch, the average bill in 2006 was just £735 – a difference of £497 compared to today’s prices.
Thomas Lyon from uSwitch said that online plans are where the best deals can be found at the moment. He highlighted that the cheapest online plan was £217 cheaper than the average price being paid on the six fixed-price deals. So it doesn’t have to be a bad thing for those seeing their fixed deals come to an end, because they could well find a cheaper energy deal online.
Gas storage facility given approval
March 12, 2010 at 2:23 pm
The UK’s gas storage facilities have just been given a massive boost by the government. It has just provided a licence for the construction of a natural gas storage facility under the Irish Sea that will cost in the region of £660 million.
The Gateway Project, as it is known, is being developed by Gateway Storage Company. The salt deposits under the sea are a perfect place in which to store natural gas, and once completed they will improve the UK’s gas storage capacity by an incredible 30%.
The actual storage facility will be made up of 20 vast caverns. Each of these will be built between 750 and 1,025 metres below the sea floor. Together they will have a combined storage capacity of 1.5 billion cubic metres.
The new facility will be situated about 15 miles from Barrow-in-Furness. Now that the licence has been granted it is expected that construction work will begin as early as this year. Commercial operations are billed to begin in 2014.
The main aim behind the new facility is to improve the flexibility of gas supplies, especially when prices go up or there is particularly high demand. The salt caverns are perfect for storing gas because they can withstand the incredibly high pressures that are generated.
The chairman of Gateway, George Furness, said that they were now “fully engaged with the project’s engineering design and are targeting 2014 for the start of commercial storage operations.”
With fears over the security of the UK’s gas supplies in the future, and the constant threat of gas being used as a political weapon by such countries as Russia, this is a positive move for gas supplies in the country.
BP: Gas is the answer, not wind
March 5, 2010 at 2:39 am
The chief executive of BP, Tony Hayward, hit the headlines recently after stating that Britain should put less emphasis on developing its wind power options and work instead on utilising its gas supplies by improving its storage and infrastructure.
In an interview on BBC Radio 4, he said that in Britain gas comes with “a very unreasonable paranoia”. Instead, he called it an “opportunity”, highlighting its low-carbon qualities and suggesting it could be the best way to “bridge between where we are today and where we want to be in 20 or 30 years’ time”.
He also made similar comments in an interview in The Guardian newspaper, highlighting that gas is the best strategy at the moment for the UK’s energy needs and that we should make much more use of it.
In comments that are sure to prove controversial, he also called for the scaling down of green energy programmes as these were not going to help the UK in the short term. He highlighted wind in particular, criticising it as being too ambitious. He said that wind schemes may struggle to reach even half of their set power goals, and that as a result we should move into wind power generation much more slowly rather than jumping straight in.
Gas, on the other hand, gets a bad press, but is the best way to beat global warming in the short term. He said that if Britain used its own North Sea reserves with imports from many different sources then this would be the best way to deal with our energy problems. He also highlighted the fear surrounding Russian gas, saying that the possibility of Russia using gas as a political weapon was “massively exaggerated”.
