fuel | ukwatch.net

Tame the fat cats

Alex Doherty — Wed, 27 Aug 2008 18:25:15 +0000

The surge of support for a one-off windfall tax on energy firms’ obscenely excessive profits may be on the point of becoming irresistible.

When even those on the fringes of government, such as Rob Marris and Steven Pound, feel emboldened to nail their colours to the mast, it is fair to say that times are changing.

To some extent, this is because of the perceived weakness of the dead man walking in Downing Street, but it is also because increasing numbers of the parliamentary Labour party can see the dole queue beckoning.

They realise that something must be done to show that the Labour Party is reconnecting with its grass-roots supporters or, currently, non-supporters.

And there are few fat cats as brazen as the energy bosses, apart from, say, the water and rail privateers.

But even the parasites presently living in luxury on the basis of our plundered railways and water services would find it difficult to compete in the daylight robbery stakes with the gas and electricity companies that have already put up prices twice this year and are returning for a third bite.

The so-called energy regulator Ofgem ought to be prosecuted for taking money under false premises, smiling benignly as the big six companies have imposed double-digit price rises.

Every shoddy justification for this blatant profiteering is nodded through by Ofgem, including the lie that prices to consumers have to rise because wholesale prices have gone up.

Wholesale prices were lower this month and last, but still the oligopoly pushes up domestic prices.

The big six also blame suppliers in Europe for overcharging us, but it is the companies themselves that neglected to build adequate storage facilities, in contrast to publicly controlled companies in other parts of Europe.

And there is also a false dichotomy between wholesale and retail companies.

Most gas suppliers are also gas producers, pushing up prices to their subsidiaries to be passed on to consumers and taking a double bite of profits on the way.

And these super-profits that they make are not, despite corporate propaganda, being ploughed into investment in new resources. Nearly half of their £4.3 billion profits last year were paid out as dividends, £1,813 million worth of them, to the financial institutions that dominate shareholdings.

Association of Electricity Producers chief executive David Porter tried to coax water out of a glass eye with his sob story that every £1 million taken by government from company profits would have to be raised elsewhere.

Rubbish – this implied threat of passing on the cost to consumers could be countered by a legal price freeze. Let the shareholders take the pressure for once instead of working people.

And as for his warning that a windfall tax would scare off investors, let them go. They are not investors. They are ponces on the energy wealth created by government investment.

The energy companies, including the oil transnational companies, have become too used to a sweetheart relationship with new Labour. It’s time to tame these fat cats.

Justice cries out for an immediate substantial windfall tax on the super-profits and, indeed the return to public ownership of the energy sector.

Britain: Rising Fuel Prices Blight Millions

Ellie Keen — Sun, 03 Feb 2008 23:25:00 +0000

There are many ways in which poverty affects people’s quality of life. One of these is the ability to keep warm. The recent hike in oil and gas prices has seen a sharp increase in what is termed fuel poverty in the UK. The consumer group Energywatch estimates that about 4.4 million are now affected by fuel poverty, amounting to one in six people in Britain.

People are deemed to live in fuel poverty when they need to spend more than 10 percent of their income to heat and light their house. However, this rough definition is only part of a more complex situation that also involves a number of deprivations. These include poor housing stock with bad insulation and inefficient heating systems, rising fuel prices and low incomes. Fuel poverty therefore provides a good indication for the general level of poverty in society.

Based on the figures of Ofgem, which regulates electricity and gas markets in the UK, the last time fuel poverty levels were as high was in 1999, a period affected by broad world economic turmoil. Figures then fell until about 2005, but started to rise in the following years.

For many, fuel poverty is a question of life and death. The sick, the disabled and older people on low incomes are especially affected. Every year, tens of thousands die because they cannot afford to adequately heat their homes. Some 93 percent of these so-called “excess” winter deaths occur among those over the age of 65. Last winter, there were an estimated 23,900 such deaths.

Fuel poverty cannot be regarded separately from the general rise in poverty. The recent turbulence on the world markets following the US credit crunch crisis is leading to a further increase in attacks on the living conditions of millions, as the major corporations and banks seek to offset their losses onto the backs of the working class. In addition, many small and medium-sized companies are facing severe difficulties, if not being driven to the wall. This will have a devastating impact on the lives of millions of workers, increasing poverty in general and fuel poverty in particular.

This general trend can be seen in the pricing policies of the six corporations that dominate the energy markets in Britain. The latest rise in fuel poverty is directly linked to a hike in prices by these major energy suppliers. Three have raised their prices significantly this year. British Gas, the UK’s biggest power provider, announced increases in gas and electricity bills of 15 percent. Npower raised its electricity prices by 12.7 percent and gas by 17.2 percent, and EDF Energy put up its electricity tariffs by 7.9 percent and gas bills by 12.9 percent. E.On, Scottish Power and Scottish & Southern Energy are expected to follow soon. These increases will inflate household energy bills by well over £100 a year, pushing the average yearly cost to more than £1,000. It is estimated that each 1 percent increase in energy bills sends 40,000 more households into fuel poverty.

At the same time, the energy companies are making massive profits. There are many indications that the recent price hikes are nothing but a shameless attempt by these corporations to line their pockets. They seek to justify the consumer price hikes by pointing to a rise in wholesale costs for oil and gas on the world markets. While the energy companies claim they are simply passing on these extra costs to the customer, at best this is only half the truth. According to consumer groups, the current rises faced by domestic customers are far above the increased wholesale costs faced by these corporations.

British energy suppliers are holding the working class to ransom. For example, EDF claimed that “wholesale gas prices had risen 117 percent since February last year, with electricity up 90 percent over the same time,” whereas Ofgem put these figures at 31 percent for gas and 40 percent for electricity.

Research sponsored jointly by UNISON, the public service trade union, and the National Right to Fuel Campaign found that the average household prices charged to customers had increased by £2.3 billion more than the costs of producing and selling the electricity and gas that was supplied. In other European countries, such as Germany and France, price rises have been on a far lower level, even falling in some cases.

Consumer groups are demanding the government order a Competition Commission investigation into whether there has been “tacit collusion” by the power suppliers that dominate the UK market. Allan Asher, chief executive of Energywatch, told BBC News 24 that the entire energy market should be reviewed by the Competition Commission. “The price rises we’ve seen are not justified,” he said, adding, “There’ll be more, but sadly the market is not working well and that’s leading to consumers paying much, much more than they need to.”

Following a meeting between Alistair Darling, the chancellor of the exchequer, and Ofgem last week, a spokesman said the chancellor was “not minded” to call for an inquiry after “he had been reassured the market was working properly.”

This response reflects the contemptuous attitude of the government to the problem of fuel poverty. In 2001, the government announced a target to eradicate fuel poverty for all vulnerable and low-income households by 2010 and all other households by 2016. But in practice, it was adding to the problem by raising VAT (value-added tax) on consumer bills. A research commissioned by the Energy Efficiency Partnership for Homes—a group of 700 industry bodies concerned with domestic energy efficiency—pointed out that electricity prices surged by 39 percent and gas prices by 61 percent between 2003 and 2006.

The eradication of fuel poverty and poverty as a whole is only possible through ending the domination of society by the transnational corporations, including the energy companies. The economy must be organised not for the profit of a few but to meet the needs of all; bringing the utility companies under the democratic control of the working class to guarantee that every household receives the basic necessities of heat and light.

Great fuel robbery

JamieSW — Sat, 05 Jan 2008 17:42:22 +0000

THE huge price increases for gas and electricity announced by Npower, which will be mimicked or even exceeded by the rest of the energy privateers, are a further argument for taking these utilities back into public ownership.

The government response abdicates all responsibility for the rises and could have been issued by a speak-your-weight machine.

It could be summed up as "not me, guv. It's their decision. Privatisation works and we've got a safety net for those it fails."

On every count, the Department for Business, Enterprise and Regulatory Reform spokeswoman, who has the dirty job of explaining the government line, is wrong.

"Price changes are commercial decisions for the companies involved. There is a competitive market in the UK monitored by an independent regulator, Ofgem."

There is no competitive market. It is an oligopoly for which Ofgem operates as a fig leaf, as with all the so-called independent regulators of privatised natural monopolies.

The "price changes" - why not shame the devil and call them price rises? - are simply a means of maintaining an unjustifiable level of shareholder dividends.

"The competitive market has delivered significant savings for UK consumers."

Has it really? If so, why have prices zoomed by two-thirds over the past four years?

For a country that had huge oil and gas resources in the North Sea, which have been frittered away since they were handed over to transnational energy corporations, and hundreds of years of coal reserves, who should answer for the widespread fuel poverty here?

Who should explain why the transnationals are able to sell gas cheaply to the energy companies which then raise already inflated prices to consumers in Britain?

All of these natural riches, which could and should have been used to reindustrialise Britain, were handed over to the private sector to be squeezed dry in the service of private profit.

The idea that the rigours of "competition" and "private-sector management skills" will offer a more efficient, cheaper and better service to consumers has been debunked by the history of privatisation over the past quarter-century.

On the one hand, it has made an extremely small proportion of society very rich.

On the other, the vast majority of the population, who used to be collective owners of these industries, are now held to ransom by these licensed bandits, constrained only by a supposed "regulator," who is as much use as a chocolate teapot.

Gordon Brown and his ministers cannot get away with a defence of "What can we do? We're only the government."

They could, as a first step to returning the energy sector to public ownership, impose price controls on gas and electricity prices.

Why not? They have had no difficulty in imposing below-inflation rises on teachers, nurses, police officers and other public-service workers.

Why should private shareholders be less affected by government measures to hold down inflationary pressures? Rocketing fuel prices are a much bigger spur to inflation than a 2.5 per cent rise for essential workers.

The great fuel robbery is just a microcosm of the overall new Labour strategy of allowing big business to gorge itself on higher profits while working people are penalised and abused.