Posts Tagged ‘fuel poverty’

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Gordon Brown Deal on Fuel for Poor: Companies May Charge Customers

2008 September 11

Today, the Prime Minister of the United Kingdom, Gordon Brown, announced plans to help households with rising fuel costs. Criticised for not imposing a windfall tax on fuel companies, the government instead agreed a £910m package with them. Already the companies are hinting they may pass the cost onto consumers.

Mr Brown urged the energy companies not to pass the costs onto customers. But David Porter, Chief Executive of the Association of Electricity Producers that represents the six largest hinted the energy companies may pass the cost of £1Bn measures onto customers, saying they may not be able to avoid it.

The outline of the plan is this:

  • Encouragement of bill payers to save money by paying by direct debit,
  • Half price insulation for all households regardless of income,
  • Free cavity wall and loft insulation for pensioners and poor households,
  • A freeze on price rises for those on benefits with social tariffs,
  • An extra £16.50 per week for pensioners, the unemployed with children under five, and the disabled if there is a severe winter,
  • A partial reversal to the cut of the Warm Front programme giving free central heating to the poorest pensioners,
  • House to house calls in deprived areas to offer help.

The Prime Minister said “Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter.”

“This is the right approach, giving priority to permanent – not just one-off – changes, with the offer of lasting benefits and fairness for all families, cutting bills permanently every year,”

That the energy companies may pass the cost onto customers is unfortunate given:

  • The 19% increase in dividend payouts to shareholders last year,
  • Meaning a £1.64Bn payout to shareholders in dividends,
  • Research by the Local Government Association found that the big six were “not necessarily” keeping profits to invest in future technology,
  • Business Secretary John Hutton denied the government was being soft, saying they had to be allowed to make a profit to guarantee future investment,
  • Prices have already been raised to consumers:-
  • NPower: Gas up 17.2%, electricity up 12.7% on 4 January,
    NPower: Gas up 26%, electricity up 14% on 29 August,
    EDF Energy: Gas up 12.9%, electricity up 7.9% on 15 January,
    EDF Energy: Gas up 22%, electricity up 17% on 5 July,
    British Gas: Gas up 15%, electricity up 15% on 18 January,
    British Gas: Gas up 26%, electricity up 16% on 30 July,
    Scottish Power: Gas up 15%, electricity up 14% on 1 February,
    Scottish Power: Gas up 34%, electricity up 9% on 29 August,
    E.On: Gas up 15%, electricity up 9.7% on 7 February,
    E.On: Gas up 26%, electricity up 16% on 21 August,
    Scottish & Southern: Gas up 15.8%, electricity up 14.2% on 19 March,
    Scottish & Southern: Gas up 29.2%, electricity up 19.2% on 21 August,
  • A National Housing Federation report suggests almost one in four people will be in fuel poverty by next year. Fuel poverty is defined as spending more than ten percent of income on energy bills.

Mark Owen-Lloyd, head of power trading for E.On UK, said at an Ofgen seminar yesterday that a bitter winter with already high energy prices “will make more money for us.” E.On was quick to apologise for the remarks.

Comments

The government’s proposals have been received poorly by unions and many campaigning on pricing and fuel poverty.

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