February 10, 2014 at 12:24 pm
British Gas has seen a massive decrease in its profits over 2013 due to customers taking their business elsewhere. In an attempt to avoid rising energy prices, many homeowners have switched to smaller companies, leaving the largest energy providers, such as British Gas, out of pocket.
British Gas, the UK’s largest energy supplier lost around £30 million in profit in 2013, compared to 2012: a 4.1% drop. This is due to nearly 350,000 customers switching in recent months from the six biggest energy suppliers such as British Gas, to smaller companies that offer lower prices and better service. This comes as no shock considering British Gas had recently increased its average energy bill by 9.2%. With a free market, larger companies that have the monopoly also have freedom to increase their prices radically. However, this appears to have had a detrimental effect on profit towards the end of 2013.
The massive loss of profits for British Gas has had a significant impact on their share prices, especially since Centrica, the parent company of British Gas, issued profit warnings at the end of 2013. Knowing they wouldn’t meet their profit targets, Centrica warned shareholders in advance in order to avoid a major backlash. Admitting that they had fought the rising costs of energy by absorbing the costs themselves throughout 2013, British Gas were left with no other choice but to drastically increase their household gas and electricity prices in order to appease shareholders.
However, with this unforeseen move to placate shareholders, Centrica has let down many of their loyal customers, forcing them to explore alternatives. This, inevitably, has led to thousands of customers switching from British Gas at the end of 2013, causing a direct hit on overall profit.
Due to the drastic rise in energy costs, politicians have stepped in to address the issue, with Ed Miliband, Labour Party Leader, promising a price freeze on energy, if Labour win the next election. Shadow Energy Secretary, Caroline Flint, has also expressed concern, stating: “We will break up the big companies, put an end to their secret deals and make tariffs simpler.”
However, despite the political promises to curb the monopoly on the energy free-market, concerns still abound for Centrica and British Gas, who are now acutely aware that price hikes and political intervention lead to loss of investor confidence and loss of shareholders. Despite the worry of political involvement, Sam Laidlaw, Chief Executive of Centrica has released a statement saying: “Energy suppliers and politicians both have a role to play in helping to minimise the impact of higher costs on bills and improving transparency to restore trust in the industry.”
Despite the hike in prices, Centrica still continues to invest in North Sea oil reserves, making it unclear whether they intend to lower costs or continue with the new high prices.
May 24, 2013 at 3:49 pm
Shell have officially dashed any hopes the UK shale gas industry might have had of luring the giant extraction company into negotiations.
In an official statement Simon Henry, the company’s chief financial officer said that Shell had more pressing concerns in other parts of the world.
He went on to say that the UK shale gas situation is unproven, and perhaps tellingly he is quoted, “Do we want to be first in and be in the headlines every day in the UK? Well, your answer is: we are not”. Could this mean Shell are giving the controversial practice a wide berth in light of their recent environmental/PR disasters in the Gulf of Mexico, North Sea and Arctic? And if so, what does this tell us about the true cost of fracking?
Fracking, said to have re-invigorated the U.S energy market, is being supported by the UK Government, doubtless for similar reasons. However, the practice, already widespread in America, is blamed for the disintegration of local communities, the poisoning of local water sources and the release of harmful pollutants into the air.
Does it come as any surprise that Shell are wary of stepping headlong into the unveiling of similar problems on home soil? Given the certainty of local and activist opposition over the uncertainty of the rewards, perhaps they prefer to operate in more remote areas of the world for now.
Shell’s position marks a complete u-turn on last year’s when the very same spokesman admitted that the unproven UK market was a tempting option for the company.
However, since the go-ahead for fracking was given by David Cameron, smaller players are already looking for contracts.
Experts say that this mirrors the pace of development in the US where smaller players started the game off and bigger ones got involved as the scale of availability became more apparent.
Shale industry experts agree that any reserves, however big, are indeed finite. Opponents of fracking meanwhile are convinced that finite reserves are not worth the environmental and human damage that extraction causes. Instead they support investment in more sustainable and environmentally friendly energy production such as sun, wind, sea and biogas.
March 8, 2013 at 2:31 pm
Scottish Southern Energy (SSE) have recently decided to put their money where their mouth is in regards to customer service and are paying consumers £20 per service failure. This news is extremely timely. A survey, carried out by uSwitch, has revealed that 60% of us now actively distrust our energy suppliers.
The biggest customer gripe is that we do not feel we are getting value for money (48% of respondents). 33% of us are irked by the fact that suppliers do nothing to help us reduce our bills. Although consumers can of course vote with their feet and switch supplier, it seems that many of us just don’t have the time or inclination to do this and would like advice from our current supplier on how to save energy.
Communication is another key area for consumer concern, with 37% of us feeling that there is a distinct lack of openness in the relationship between energy giants and their customers. With gas and electricity bills becoming increasingly difficult to understand, it is no surprise that a quarter of us cite this as a major irritation. Then, of course, there is the thorny problem of being able to speak to the right person when we phone our supplier with a query. 12% of us said that energy companies make it hard for the consumer to communicate with them.
Conversely the 40% of respondents who turned out to be happy with their supplier cited easy-to-understand bills and other information, good customer service, ability to communicate and a helpful attitude as being major factors in their satisfaction.
Ann Robinson of uSwitch advises consumers to shop around. With potential savings of £250 to be made, the power is in the hands of the customer. She also advises consumers to let the energy suppliers know that they are not satisfied with the progress being made in the area of customer service.
March 5, 2013 at 2:35 pm
With energy costs soaring, no one welcomes the arrival on the doormat of their gas or electricity bill. However, worse still, is when there is something wrong with the bill and you know that you have to embark on the tortuous journey of querying it.
How many times have you phoned your energy supplier and been passed from pillar to post before finding the right person to speak to, and how often do suppliers promise to phone you back and never do?
Now, for the lucky customers who use Scottish and Southern Energy (SSE), this could be a thing of the past. The energy company is taking customer satisfaction seriously and is promising to pay £20 each time they fail to deliver on five main areas of customer care.
- not to transfer you more than once without your agreement
- to call you back as promised
- to pass you to a manager if that is what you want
- to offer support with your bill if required
- to help save you money
There is no limit to the number of times customers can claim the £20, although it must be claimed within ten days of the failure in service. The money will appear as a credit on the customer’s next bill and if you use prepayment cards the sum will be shown next time you top up.
Alistair Phillips-Davies of SSE has acknowledged that customer care in the past has been less than good but says that the company’s new charter and guarantee shows that SSE wants to be “more than the best of a bad bunch”. He hopes that the message will be heard by the whole of the industry that it is time to “transform for the better what customers experience”.
To see the Domestic Customer Charter in full click here.
February 16, 2013 at 4:04 pm
The winter fuel payment can be a lifeline to those struggling to pay the ever-increasing cost of heating their homes, but it has long been a subject of debate.
Would the government’s money be better spent if it were targeted more accurately at those in real need? Currently, as long as you were born before 5 July 1951 (or if you are in receipt of certain benefits) you are eligible for a tax-free lump sum payment of between £100 and £300. It is not paid to prisoners, long-term hospital patients or care home residents, but it doesn’t matter whether you are rich or poor as there is no means testing for the payment. Somewhat bizarrely, you do not even need to be resident in the UK to be eligible.
Now “celebrity” pensioners such as Joanna Lumley, Esther Rantzen and David Jason have started a campaign which would mean that those who are not in financial need of the payment can hand the payment back easily.
A survey carried out recently by uSwitch.com highlighted the fact that the majority of us would like to see changes made to the current system.
The following areas were on the “wish list” of those who took part in the research:
- 82% thought the payment should be made only to those actually living in the UK
- 66% would like the possibility of opting out of the payment (not currently possible)
- 60% thought the payment should be made to those with disabilities (with 58% thinking general health should be taken into account too)
- 55% felt that the amount paid should take account of inflation
- 52% would like low-income households to be eligible regardless of age
- 49% thought the allowance should be means tested
- 23% would like the unemployed to receive the payment
January 15, 2013 at 10:25 am
With many of us waking up to snow this morning and more of the white stuff forecast to fall later in the week, the vulnerable are being urged by the Government to check that they are taking full advantage of all that they are entitled to. This help ranges from discounted energy bills to help with insulating their homes.
Householders have just under a week to apply through the Warm Front initiative for help in heating or insulating their homes. Applications should be with Carillion, the administrators of the scheme, by Jan 19th.
Funding up to £3,500 is available for assistance in insulating things like hot water tanks and lofts, having cavity wall insulation fitted, or draught proofing your home, while a grant of up to £6,000 can be awarded to replace your heating system with an oil or alternative energy system. For full details see the Warm Front website.
Some of the most vulnerable pensioners are also entitled to energy bill discounts of £130. Over a million pensioners have already received the discount whilst further pensioners still have to provide further information for a decision on eligibility to be made. This discount has no bearing on the two payments made automatically to pensioners: the winter fuel payment and the cold weather payment.
Further information on the Warm Home discount scheme is available on the website.
It is worth remembering that even if you do not qualify for the discount scheme, many providers have their own discounts, details of which are shown on the individual companies’ websites.
January 10, 2013 at 10:13 am
George Osborne recently revealed the Government’s gas strategy, and the details have caused a lot of controversy. The details were announced in the autumn statement, and one of the most controversial areas was the chancellor’s plan to offer tax incentives for the production of shale gas.
Osborne said that the government is “consulting on new tax incentives for shale gas”, and also announced the formation of the Office for Unconventional Oil and Gas to make regulation “safe but simple”.
This announcement had long been expected, but it has still proved to be very controversial. Critics of the move suggest that Britain will find itself trapped in a future of high carbon emissions if Osborne goes ahead with his plan.
This is because of recent problems that arose from the process of fracking, which is used to get to the shale gas. The process uses strong chemicals, and in 2011 it was stopped after it caused two minor earthquakes. However, it is thought that it will soon be given the go ahead again.
Osborne said that Britain did not want to miss out on the opportunity to exploit its shale gas reserves, just as they have done in the United States. Gas prices have fallen there because of their shale gas production boost.
However, environmental groups and eco businesses have been left angry and frustrated by the announcement. They believe that the UK should be heading towards a sustainable future of wind and solar energy rather than one where carbon is still the main source of energy.
The directors of Greenpeace, Friends of the Earth and other organisations voiced their concerns, and stated that now is the time to encourage growth in the green industry rather than hand incentives to the gas industry.
October 25, 2012 at 10:22 am
It looks like energy customers are going to have to get used to the idea of paying higher energy bills just as the weather starts to turn cold, now that Scottish Power has become the latest energy company to increase its prices.
From December 3 onwards, 2.3 million Scottish Power customers paying for both gas and electricity are to see their bills go up by an average of 7%. The average annual dual fuel bill will rise to £1,271, and direct debit customers will see an average increase of 8.7%.
The rise is apparently due to increased costs in a range of areas including transporting power to homes. Neil Clitheroe from Scottish Power said “we regret that we have had to announce a price increase”.
The move follows increases from British Gas and Npower, and follows a similar pattern to previous energy rises where all of the larger power companies seem to increase their prices at the same time. Consumer groups have also complained that the latest round of price increases are coming into affect just before the cold winter months.
British Gas recently announced that it will be increasing its bills by 6% from November 16, adding an extra £80 onto the average dual fuel bill. Npower has announced that its gas prices will be going up 8.8% and its electricity prices by 9.1% from November 26.
Scottish Power has confirmed that it will be writing to the customers who have been affected to explain what the increases mean. However, the focus for customers will once again be on reducing their power usage by considering options such as using better insulation in the home and turning down their thermostats.
August 16, 2012 at 10:14 am
British Gas recently announced that it had seen a large jump in profits. With energy prices a lot higher than they were 18 months ago, there are now calls for the company to reduce its bills so that hard-pressed customers do not suffer another long, cold winter.
British Gas saw a 23% rise in profits, up to £345 million, for the first six months of 2012. This is despite the fact that it increased its bills in December 2010 and again in August 2011. Even though bills went down slightly in January 2012, they are still a lot higher for the energy giant’s 15.8 million customers than they were a couple of years ago.
Fuel poverty is becoming an increasing problem in the UK as more households become less able to afford their heating. A household is said to be in fuel poverty when it spends 10% of its disposable income on heating, and currently about one-in-five households are in this situation.
The profit rises were criticised by the shadow energy secretary, Caroline Flint, who said that customers will not understand why they are having to pay so much when the company is making such a large profit.
However, the chief executive of Centrica, Sam Laidlaw, said that the profit was a “reasonable level”.
If it is still too high for you then you might want to consider switching providers. You can do this by visiting a comparison site to see if you can find a better deal.
Alternatively, consider reducing your bills by turning off your heating when you are out of the home or turning down the thermostat by even one degree which can cut bills significantly over the course of a year.
July 18, 2012 at 10:14 am
As energy bills continue to rise, it seems that everyone is on the lookout for ways to cut back on energy usage and save a few pounds. Now British Gas has launched a new service that it says will allow customers to do just that.
The company has just released a new tool that will allow people to control their heating and thermostats remotely using nothing but a mobile phone.
British Gas claims that the technology could enable people to make savings of up to £140 a year on their gas bills by turning off their heating when they are not in.
However, the new service will not be free. It will cost £149 for customers paying for a new central heating system alongside it, £199 for British Gas customers and £229 for customers of other power companies (all prices include installation).
Using smartphones, laptops or iPads, customers will now be able to turn their heating on and off when they need to, and apps will allow them to control their thermostats. Even reducing the thermostat by one degree can significantly reduce energy costs, so this innovative idea could well lead to savings for some people, even if it takes a while to offset the original cost of the device.
There are also suggestions that people should do more to remember to turn down their thermostats and turn off their heating before they go out rather than investing in a new system, and that this may be the best way overall to save money.
However, it shows innovation and could be a sign of things to come now that smartphone ownership and home broadband are so widespread. It also helps people to become more aware of the energy they are using and could help them to save more.