UNISON and the National Right to Fuel Campaign are demanding
that Ofgem launches an immediate inquiry into obscene extra
profits of £2.5 billion that energy companies are awarding
themselves at huge cost to household consumers.
The average family is being ripped off to the tune of £100 a year to
pay for this Ògolden holeÓ. Research, sponsored by UNISON and
the National Right to Fuel Campaign shows that the increases in
charges to customers are nearly £2.5 billion more than the
increases in the costs of producing and selling the electricity and
gas.
The energy companies in the report, produced by Cornwall
Energy, expose the figures in a comprehensive analysis of costs
and expenditure.
The report* supports the view expressed by many commentators
that companies are just passing increases in wholesale costs
straight through to consumers. But many of these companies are
setting the wholesale price themselves.
UNISON General Secretary, Dave Prentis, said:
ÒIt’s all very well Ofgem calling for windfall profit taxes in the future
but what is it doing about the current rip-off? Ofgem is supposed to
be protecting customers. Why is it worrying just about the future?
We want action taken now.
ÒHard-working families are desperately worried about increasing
fuel bills, rising housing costs, food costs and millions of public
sector workers are being told they must accept pay cuts.
ÒPensioners are finding it a huge struggle, despite the winter fuel
payments that have been wiped out by these greedy companies.
ÒThe Government should order Ofgem to do its job properly. The
watchdog should stop making excuses for the energy companies
by coming out with glib statements that if people don’t like it they
can switch. We will be sending Ofgem our report so they will have
no excuses left.Ó
Lesley Davis, chair NRFC said:
ÒIt beggars belief that these energy companies are announcing
further price increases when we know that, while consumers paid
£8.2 bn more for their gas and electricity in 2006 than they did in
2003, fuel costs rose by some £4.5 bn. A significant part of the
remainder can be accounted for by companies earning higher
profits at the expense of low-income consumers.
ÒThese deceitful price increases have forced more than 1.5 million
households into fuel poverty and mean that government will not
meet its fuel poverty targets. In the meantime, Ofgem fiddles while
the fuel poor are burned. The Regulator, Ofgem is sitting back,
doing too little and too late.
ÒEnergy markets, which government will be relying upon to meet
their climate change targets, are not working well and Ofgem
needs to take action now to prevent further suffering by low income
consumersÓ.
The report’s key findings:
Expenditure by households on gas and electricity increased by
£8.2bn between 2003 and 2006, but costs increased by £5.9 bn
and only £4.5 bn was due to additional fuel costs. So higher fuel
costs that are used to justify the price hikes account for only 55% of
the rises.
Increased expenditure by households on gas and electricity (2003
– 2006) is a whopping £8.2 bn (60%).
Increased costs have been £5.9 bn.
Increased margins are £2.3 bn.
Nearly 30% of the extra expenditure by customers has gone in
increased profits.
ends
* Gas and electricity costs to householders, Cornwallenergy
associates.
Notes to editors:
The average household electricity debt has gone up from £159 in
2003 to £195 in 2006 and in the same period has risen from £141
to £180 for gas customers.
Customers who end up in debt face a double whammy of
disconnection or agreeing to expensive pre-paid meters being
installed. This means that the very people struggling the most to
pay their bills have to pay more than regular customers to keep
their gas or electricity running. Latest figures from 2006 show that
3.8m electricity and 2.4m gas customers are on prepayment
meters.
A typical pensioner household (aged 65-74) with gas central
heating saw gas bills rise by £260 a year and electricity by £160 –
a total of £420. For those aged over 70, gas bills went up by £200
and electricity by £150 – a total of £350.
The value of the winter fuel payment per household 60-79 is £200,
and £300 for those aged over 80.
NRFC is a not-for-profit organisation that has been campaigning
for the end to fuel poverty since 1975.
Government has statutory fuel poverty targets for England set by
the Warm Homes and Energy Conservation Act 2000. The Welsh
Assembly and Scottish Governments have legislation setting
similar targets.
The targets are that vulnerable households will be removed from
fuel poverty by 2010, and all other households by 2016. Fuel
poverty is defined as spending 10% (or more) of income to
purchase gas and electricity. In its 5th Fuel Poverty Strategy
Annual Report, government admitted that it was unlikely to meet its
2010 target, with 1.3 million vulnerable households likely to still be
in fuel poverty.
A survey published this autumn revealed that like UNISON
Welfare, many charities are increasingly funding domestic heating
debts for individuals in need, to the tune of £16 million a year.
The survey undertaken by the Association of Charity Officers in
conjunction with the Cass Business School (London), estimates
that annual spending on heating and fuel by charities is almost
20% of their total annual funding.
It also revealed that ACO members paid out £125 million in total
last year, almost matching the Government’s entire Social Fund
Community Care Grants programme. In 2005 UNISON Welfare
gave over £670,000 in grants to 1,900 members and their families.