Gas going up

British Gas owner Centrica warned a 15 per cent rise in the wholesale cost of gas could be passed on to consumers which could add £50 a year to average bills. If the 15 per cent increase is passed on to consumers, it could mean a £128 a year increase, taking average bills to £1,388.

 Audrey Gallacher, director of energy at Consumer Focus, said "... the perception is that suppliers are quick to pass on high price rises and slow to pass on small price cuts."

Tom Lyon, energy expert at uSwitch.com, said: “This is deeply worrying as consumers are still struggling to come to terms with the £224 or 21 per cent increase in bills from the end of 2010 and only enjoyed a £41 or 3.2 per cent reduction at the beginning of this year. Any further increases will see even more people seriously struggling to afford their bills."
 http://www.scotsman.com/business/energy-and-utilities/gas-prices-to-rocket-by-15-millions-of-families-warned-1-2290123

Investors first and foremost

On Wednesday, British Gas raised gas bills by 35% with immediate effect, to restore "reasonable profitability".
Profits were £992m in the first six months of 2008 , £5m-per-day profits .
"This is a business that has got a million shareholders - a lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them". Centrica's chief executive said.

One-in-three pensioners are likely to be in fuel poverty this winter Age Concern's head of public affairs said.

Poor Energy Bills

The big six energy companies are charging the poorest customers up to £330 a year more for gas and electricity, it emerged last night.

Tariffs for prepayment meters, used typically by pensioners and the less well-off, are up to 45 per cent higher than for internet customers. The industry watchdog branded the practice a £400 million rip-off. The gap between the tariffs has grown after a round of inflation-beating price rises across the sector . Figures compiled by Energy-watch, the watchdog, show that on average prepayment customers are charged £255 a year more than online customers for power, compared with £190 before Christmas. E.ON’s prepayment charge is an average of £1,097 – 45 per cent higher than its internet tariff of £769. British Gas charges its prepayment customers 30 per cent more.

Graham Kerr, of Energywatch, said:

“We have hard evidence of £400 million of excess profits being taken off the poorest members of society just at a time when fuel poverty is continuing to rise. Instead of taking from the rich to give to the poor, it seems that energy companies are taking from the poor to give to the rich.”

More than 4.5 million people are in fuel poverty – spending more than 10 per cent of income on heating their home. One in five prepayment customers is classified as fuel-poor. A third of single parents with dependent children use gas prepayment meters.

British Gas Prices

Latest estimates put 4.5 million UK households in fuel poverty; spending more than 10 per cent of their income on gas and electricity. Just one month after British Gas increased energy bills by 15 per cent British Gas, the country's biggest energy supplier, is expected to announce a 500 per cent rise in profits today.

"It's quite sickening when companies make these huge profits while, at the same time, we are expecting 25,000 excess winter deaths as a result of people not being able to keep warm," said Lesley Davies, the chairman of the National Right to Fuel Campaign. "They prattle on about the winter fuel payments for pensioners but there are just as many single-parent families and others who cannot get the payment."

And like other businesses it isn't only the customer that is suffering but also the employees - The GMB union complained that as well as "fleecing its customers and making record profits" British Gas was scrapping its final-salary pension scheme.

But Capitalism and the competitive market benefits the consumer surely - or at least that is what the capitalist economics textbooks like to state .

In all, 20 active suppliers have reduced to six companies . These big six energy companies are both producers or generators and retailers. That means they make money when the wholesale price is high and they make money when the wholesale price is low. In the most contested part of the market place – the average direct debit, dual fuel customer – only £13 separates the offers from the five companies which have raised prices so far. An average consumer switching from one such deal to another stands to save 25 pence a week.

Capitalism - Delivering a service - But for a price .