Big six energy firms to face MPs following price hikes
Bosses of British Gas, SSE, and npower and other suppliers called to explain to energy committee rises, pricing and profits. Read more…
SSE raises energy prices by 8.2% – adding £104 to average annual bill
Energy company blames rise in government levies on energy bills, network upgrade costs and higher wholesale prices. Read more…
Ed Miliband’s energy price freeze wins backing of consumer groups
Labour leader’s speech welcomed by several organisations, who say the plan has ‘exploded assumptions’ about the market. Read more…
Centrica and SSE continue to slide on Labour plans as markets slip on US concerns
Energy companies under the cosh again, but investors continue to worry about US debt ceiling. Read more…
Energy sector should face independent review, says Which?
Consumer group says big six power providers should not control both power stations and retail supply businesses. Read more…
Scottish & Southern Energy predicted to announce profits of up to £1.4bn at a time when many are struggling to pay their bills
Accusations that the big energy firms are profiteering at the expense of UK households will be centre stage again on Wednesday if Scottish & Southern Energy, as expected, reveals bumper profits for a second year running.
Analysts are predicting the Perth-based company, which supplies 9.6m households with gas and electricity, could announce profits as high as £1.4bn for the last 12 months – a 5% rise on the previous year.
News of further big profits at SSE, which has been hit by a mis-selling scandal this year that saw it fined a record £10.5m in April, will cause further outrage among fuel poverty campaigners and householders struggling to pay their bills.
It will also heap more pressure on both the government and Ofgem, who have been accused of standing by as the big six suppliers profit at their customers’ expense.
Last October SSE raised domestic energy prices by 9% to coincide with the start of the coldest and longest winter of recent years. A few weeks later it revealed that it had made £397.5m in the six months to the end of September, compared with £287.4m in the previous year – a 38% increase for that period.
SSE is not alone in announcing startling results. National Grid recently posted a £2.7bn profit on revenues of £14.4bn – a margin of about 19%. British Gas said an increase in gas usage of 18% in the first four months of 2013 due to very cold weather had helped its figures. Its parent company, Centrica, is on target to post full-year earnings of £1.4bn, prompting the Fuel Poverty Action group to target the companies recent AGM with its Stop the Great Fuel Robbery campaign.
Mark Todd, director at price comparison service, energyhelpline, said the profits at National Grid needed to be addressed by the government. “This is the kind of margin normally associated with successful high-risk activities, not with running a low-risk infrastructure businesses that have a captive market. The attention really must turn to how consumers can get a better deal from the energy market.”
He said typical household gas prices have risen 173% over the last 10 years and warned that despite the much publicised Downing St summits, only a few million homes are on the best deal possible, with over 20m household still overpaying.
Elizabeth Ziga, of the Fuel Poverty Action group, said: “While SSE customers were skipping meals to keep the heating on, the company continued to rake in bumper profits. To end this chilling profiteering, we have to break the big six’s grip over our energy.”
Last week the Department for Energy and Climate Change warned there were 4.5 million people in fuel poverty in 2011. Since then, campaigners have warned, their number will have risen as prices and consumption have jumped this winter. Many household have still had their heating on this week.
Meanwhile, Wednesday’s results at SSE will include the latest numbers on compensation for mis-selling. In April the regulator Ofgem cited a “woeful catalogue of failures by the SSE management” that led to years of mis-selling over the phone, in stores and on customers’ doorsteps. SSE stopped door-to-door sales in 2011, but such practices persisted in its other sales channels until September 2012.
Energy supplier used ‘misleading scripts’ and failed to give ‘accurate estimates and comparisons to customers’
The activities of large energy suppliers were under the spotlight again on Friday when Ofgem, the industry regulator, confirmed that it would levy a £10.5m fine on SSE for mis-selling.
The penalty, the largest the watchdog has imposed, was levied for numerous breaches of SSE’s obligations relating to telephone, in-store and doorstep sales activities.
It is the second time in less than two years that the utility has been found guilty of misleading customers on the doorstep and comes just 48 hours after Ofgem announced it was investigating SSE and five other suppliers about their failure to meet energy efficiency targets.
In the latest mis-selling case the contraventions involved “the use of misleading scripts” by both telesales agents, while also failing to give “accurate estimates and comparisons to customers”.
SSE said it had “nothing further to say” about the fine but confirmed it would pay up by the 17 July deadline.
When the penalty was first proposed earlier this month, the company said it was “deeply regretful that breaches occurred and apologises unreservedly to any customers”.
SSE pointed out that a large number of the breaches referred to activity undertaken between October 2009 and July 2011 – the point at which SSE suspended its doorstep sales operations in Britain.
But the Ofgem confirmation notice also made reference to the fact that in May 2011 SSE was found guilty of “misleading commercial practice” in relation to doorstep-selling activities between 2008 and 2009.
SSE, British Gas and Scottish Power are among six energy companies that are to become the subject of an investigation by Ofgem into their failure to reach UK carbon reduction targets.
British Gas could face a large fine after missing one target by nearly 40%.
Meanwhile another of the big six energy companies, npower, is facing the threat of a consumer boycott. More than 170,000 people have now signed a petition calling on the German-owned business to pay more tax in Britain.
Regulator to look at why British Gas, SSE and Scottish Power failed to reach carbon reduction targets
British Gas, SSE and Scottish Power are among six energy firms to be investigated by the energy regulator Ofgem after failing to deliver enough energy efficiency measures to UK households.
Under the Carbon Emissions Reduction Target (Cert), legislation which was in place until the end of 2012, the big six energy companies had to introduce measures such as installing insulation or switching a household’s heating fuel from oil to gas to help reduce UK carbon emissions.
Under a separate smaller scheme, the Community Energy Saving Programme (CESP), the same suppliers had to deliver more complex energy saving measures to people in the most deprived areas of the country.
Both British Gas and SSE failed to meet their targets under either scheme, according to Ofgem, and Scottish Power missed its CESP target. Electricity generation companies GDF Suez/IPM and Intergen also missed both targets.
E.ON, EDF Energy and npower, meanwhile, all met their obligations under both targets.
Sarah Harrison, Ofgem’s senior partner in charge of enforcement, said: “At a time of rising energy bills energy efficiency can make a big difference for consumers. The fact that the industry has delivered 99% of its government energy efficiency targets is to be welcomed.
“However, Ofgem’s role is to ensure that consumers do not lose out by the failure of firms to deliver all the help required, or are not disadvantaged by late delivery. This is why Ofgem is today launching investigations into six firms who have failed one or more of their energy efficiency targets set by government.”
Once it has investigated why the companies missed their targets, the regulator can drop the case, fine them or come to a settlement agreement.
British Gas is potentially in the most trouble as it missed its Cert target by 2% and its CESP target by almost 40%. SSE also missed its Cert target, but this appears to be because it was late in filing its final figures to Ofgem – those figures, now submitted, show it was on target. But it missed its CESP target by 10%.
British Gas had made a final push to meet its Cert obligations at the end of 2012 by offering free loft and cavity wall insulation to customers of any energy firm. However, today’s Ofgem figures show its missed its insulation target under Cert by 5%.
Since the end of 2012 some energy companies, including SSE, have continued to offer free or discounted energy efficiency measures to households. Ofgem said it will take these into account when investigating the companies, but that these would not be a substitute for compliance.
The investigation into SSE opens another chapter in a bad year for the supplier. Last month it was fined a record £10.5m by Ofgem for “prolonged and extensive” mis-selling to customers.
All the big six energy suppliers have been accused of “cold-blooded profiteering” after official figures showed they had more than doubled their retail profit margins over the past 18 months and were now earning an average of £95 profit per household on dual fuel bills.
The end of the tax year is looming and it’s time to make sure you’ve made the most of your annual Isa allowance. You’re cutting it fine if you haven’t, but some providers are accepting applications right up until midnight on Friday. We have a round up of Isa deadlines, plus guides to choosing the right account – whether you want to go for a cash Isa or a stocks and shares Isa. Just don’t spend too long deciding …
Customers of energy firm SSE may be entitled to compensation after the regulator Ofgem uncovered evidence of “prolonged and extensive” mis-selling. Lisa Bachelor has put together a guide to getting your money back.
Never pay over the odds for train tickets again: watch Patrick Collinson’s video guide to cutting the cost of rail travel. As well as our own tips, readers have shared their money-saving hints in the comments section below the line.
Also on the site this week
• Anna Tims looks at what £250,000 will buy you around the UK.
• Work agony uncle Jeremy Bullmore answers readers’ employment dilemmas.
• Get information and guides to help you at different life stages using our interactive Life Navigator tool.
D’oh! this deal at Sainsbury’s is just nuts. Thanks to Matthew Sherrington, who spotted it in Southwark.
We would love to hear from you if you have seen similar silly signs. Send your pictures to [email protected]. The best will be in Saturday’s Guardian Money section.
• How might the budget affect your plans for retirement? Find out with a free report from Galvan Research & Trading.
• You have until midnight on Friday 5 April to stash away up to £5,640 in a cash Isa. Compare best buys and open your account online.
That’s all this week, thanks for reading.
Hilary Osborne, editor guardian.co.uk/money
Another investigation finds that members of the public have been told bare-faced lies by an energy firm touting for custom
When even the energy regulator accuses one of the companies under its supervision of a “woeful catalogue of failures”, it’s worth paying heed. And Ofgem is right: its report of how tens of thousands of customers were fleeced by SSE, formerly known as Scottish and Southern Energy, over years, in shops, on their phones, or on their very doorsteps does make for depressing – and depressingly familiar – reading. SSE has been investigated over its selling methods before, and last May was fined £1.5m by Ofgem. Nor is it the only one: last year EDF was ordered to pay £4.5m back to customers, and investigations into npower and Scottish Power are continuing. But here we go again: yet another investigation which finds that members of the public have been told bare-faced lies by an energy firm touting for custom.
Take this script, used by door-to-door sales people in the north of England: “What I’m here to do today is show you a government thing called deregulation which results in your energy prices being lowered by doing nothing at all.” A short sentence which, as the watchdog observes, tells two big lies: deregulation doesn’t necessarily lower prices, and it’s impossible to cut your bills by doing nothing at all. Then there’s the less elaborate false promises: the claims that an SSE tariff was cheaper than a competitor’s, even though it was more expensive; the fibs told during sales calls. These aren’t one-off mistakes, they are indicative of a culture of ripping off customers. The most shocking part of the Ofgem report is its revelation that the main auditors of doorstep sales took a commission on sales “and therefore had a financial interest in not reporting misbehaviour”.
To be clear, the problem is not SSE’s alone – nor is it recent. As the review states, how gas and electricity are sold to customers “has been a source of concern to Ofgem for a number of years”. The one thing that makes the SSE case exceptional is the size of the fine, the largest handed out to date. But big as it sounds, £10.5m it will barely trouble a company whose gross profit last year was £2.25bn. None of SSE’s top executive team have resigned, while bonuses have only been squeezed.
When Margaret Thatcher began privatising the utilities market, she declared it part of an age of popular capitalism. A quarter of a century later, what we’ve ended up with is unpopular capitalism: a giant market divvied up between six big companies, all arguably profiting from their proliferation of tariffs and opaque pricing structures. And as Ofgem points out, trust between the customer and the supplier is repeatedly breached. Mere fines and reports are not going to sort this mess out. Greater transparency may help, but best of all would be breaking up our energy oligopoly.