Making profits and leaving folk cold

Energy giant and Perth-based SSE, has revealed it expects profits to soar to £1.5 billion this year and that it will increase payouts to shareholders.

Just two months after a major price rise came into effect for its nine million customers, the Perth-based firm said it was on course to deliver a pre-tax profit increase of 8.8 per cent for the year to the end of March and would be likely to increase dividends handed out to its shareholders by 3 per cent. A price increase of £104.48 for SSE’s dual-fuel customers came into effect in November. The typical annual bill for SSE customers will be £1,304 by March, £13 higher than the UK average, according to comparison website uSwitch.com. Across the board, industry experts have calculated that the typical household utility bill has gone up by 168 per cent in the past decade.

MP John Robertson, who sits on Westminster’s energy select committee, said: “This is a disgrace. How can SSE possibly have another boost to their profits after losing so many customers? These energy barons are ripping off their customers and lining their pockets with the hard-earned cash of people struggling to pay their bills.”

Claire Osborne, an energy expert at uSwitch.com, said SSE’s announcement was “like waving a red rag at a bull”. She said: “This will come as a shock to customers who have been told they must wait until the end of March for their prices to be cut in line with the government’s levy reductions.”

Citizens Advice Scotland spokeswoman Sarah Beattie-Smith said: “At a time when so many households are still struggling with high bills and public confidence in the energy companies is so low, it’s very disappointing that SSE have chosen to put their shareholders ahead of hard-pressed consumers.”

Socialist Courier wishes to inform Ms Beattie-Smith but making profits is what capitalism is all about.

SSE chief executive Alistair Phillips-Davies said It is encouraging that SSE is on course to deliver real growth in the dividend and increases in adjusted earnings per share and adjusted profit before tax.”

 Npower chief executive Paul Massara claimed prices were high because the country’s “old and draughty houses” waste so much gas and electricity. His house won’t be, we wager!

Power to Scotland

The Pentland Firth which lies between Orkney and the Scottish mainland, has some of the fastest tidal currents in the UK.

It could provide enough renewable energy to power about half of Scotland, according to research

hot rocks

Geo-thermal energy could be a triple win for the world: clean, reliable, locally-produced power. Iceland's energy needs are  presently met by 40% geotherm but you need not be a volcanic island like Iceland to access the geotherm potential.

Recently, scientists have stated that 40% of Glasgow’s heating needs could come from geothermal power located in local abandoned coal mine shafts. There are many such mines throughout the country, and some of them are located deep enough below ground level that they have accumulated water. This water is warm enough it can be pumped up to heat buildings and homes.

Glenalmond Street in Shettleston, uses a combination of solar and geothermal energy to heat 16 houses. Water in a coal mine 100 metres (328 ft) below ground level is heated by geothermal energy and maintained at a temperature of about 12 °C (54 °F) throughout the year. The warmed water is raised and passed through a heat pump, boosting the temperature to 55 °C (131 °F), and is then distributed to the houses providing heating to radiators.

The Lairds of the land still rake it in

Scotland’s aristocrats are earning millions of pounds from windfarms on their estates , according to figures from the Renewable Energy Foundation, a charity that promotes sustainable development.

Fallago Rig in the Lammermuir Hills in the Borders, will earn landowner the Duke of Roxburghe £720,000 a year. In the course of the 25-year lifespan of the windfarm, the Duke of Roxburghe could earn something between £18 million and £62.5m.

Sir Alastair Gordon-Cumming will earn £435,000 from the 29 turbines on the Altyre estate near Forres in Moray.

The Earl of Seafield also has eight turbines on his estate near Banff in the north-east which are estimate to be able to earn him £120,000 annually.

The Earl of Moray receives £540,000 a year from 36 turbines at Braes O’Doune near Stirling.

Profiting from the poor

Consumer Focus said it estimated power suppliers were making up to £550 million a year in extra charges from people on pre-payment meters. Typical customers using the devices were often those on the lowest incomes . Energy firms were using customers who pay for their gas or electricity through pre-payment meters to help subsidise cheaper deals for others.

"The energy companies are making the most money out of those on pre-payment meters and often those are the people on the very lowest incomes." said CF spokesperson

Energy awareness group National Energy Action said pre-payment metered customers paid on average £359 more a year than those with normal meters. This contrasts with the extra annual cost of between £85 and £100 to maintain the pre-payment boxes - a sum estimated by energy industry regulator Ofgem.

An NEA spokeswoman also added: "Once you are in debt you are effectively blocked from switching to cheaper deals."

Cold Profit

Asked how high gas and oil prices could be affected by a harsh winter, energy firm , E.On , executive Mark Owen-Lloyd replied:

"It will make more money for us."

Whether meant as a joke or not , spoke the truth of what drives capitalism .

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 .

Another Failed Target

Further to the previous posting , the target to end fuel poverty in England by 2010 will be missed, according to Government's advisers .
The Fuel Poverty Advisory Group says more than a million vulnerable households will spend more than a tenth of their income on fuel by 2010.
"The Government's policies and lack of action have now made it impossible to meet the target" said the Fuel Poverty Advisory Group

Customers using prepayment meters for gas and electricity paid £140 a year more than those paying by direct debit or online. Those paying by cash or cheque faced bills of about £70 more than those on direct debit, said the group.

The Poor Pay More

Following up an earlier post we see from the BBC that energy companies have been accused by an industry watchdog of exploiting some of the poorest people in society.

Customers with pre-payment meters are paying hundreds of pounds more for electricity and gas than those with access to the cheapest tariffs . Customers on the meters are charged an average of £195 more a year than those paying by direct debit . In some cases, customers using meters have been found to pay as much as £304 more a year. There are 3.5 million electricity and 2.2 million gas pre-payment meters in Britain. Some 580,000 pre-payment meters were installed in 2006. Energywatch claims that 63% were installed by companies to recover debts, which would limit the ability of those households to switch to cheaper suppliers or payment methods.

"That they should ramp up the rates and exploit those with no access to alternative payment methods is morally bankrupt," said Energywatch chief executive of Allan Asher.

According to Energywatch, the industry is making conservatively close to £300 million a year in revenues from customers on pre-payment meters.

Market Madness

Capitalism is a system that if it doesn't make the profit , it doesn't get made .

Low prices led to sheep on hill farms being slaughtered because they could not be sold and faced a shortage of grazing with the onset of winter. Mr Picken of National Farmers Union Scotland said the difficulties facing livestock farmers could see grassland being ploughed up and left fallow.

But when it comes to making a buck , there is always an alternative .

Mr Picken said the UK was lagging behind other countries in the production of biofuels. "So there is a bit of room so to speak for growing energy crops."

Ineos Enterprises' proposal to build one of Europe's biggest bio-diesel plants in Grangemouth was given the go-ahead . And there are pending plans by DMF Biodiesel for a processing facility in Rosyth . And there will be another at Motherwell , partly financed the Scottish Parliment's Regional Selective Assistance .

So as elsewhere in the world , it is will now be a matter of growing crops for fuel not food - and farmers will be eligible for a single Common Agricultural Policy payment and also claim EU energy aid payment to a maximum of 45 Euros (£32) per hectare.

The greed for profits will starve hungry bellies .

Npower - no help to the poor

Npower, whose German parent company RWE reported profits of £1.68 billion last year on the back of rising energy prices, was singled out in a report by the Fuel Poverty Advisory Group. Scottish Power, which made £483 million last year, was also rated poorly for doing least to help its most vulnerable customers.

Households are deemed to be living in fuel poverty if they spend more than 10% of their income on heating and lighting bills. The industry regulator Ofgem estimates that there are now 4 million households living in fuel poverty in the UK.
Currently, each power company can set the level of help it chooses to offer those customers, such as through lower prices or subsidies for loft insulation.

In August, Ofgem , the industry regulator , examined what each company was doing to help its poorest customers. Its findings were then analysed by the fuel poverty group . The report said npower "clearly stands out as the company that does the least for its vulnerable customers". It also criticised the company for having the highest prepayment electricity tariffs . The original Ofgem report found that npower had fewer than 1,200 of its total 6.8 million customers on its First Step social tariff - less than 0.02%. In comparison British Gas had 300,000, or 2%, of customers receiving financial help. EDF offers help to about 60,000 customers, or 1%.