Quote: Gas and electricity bosses told 'give back profits'
By Mark Kleinman, City Editor
Last Updated: 12:31am GMT 02/03/2008
The heads of the biggest gas and electricity companies are being ordered by the Government to hand over part of their multi-billion pound profits - or face a new windfall tax.
An elderly couple: Gas and electricity bosses told 'give back profits'
Charities, including Help the Aged, have expressed their concern at rising fuel bills
The Sunday Telegraph has learnt the chief executives of the utility giants have been summoned to Downing Street and given a dressing-down over the soaring sums being made from millions of customers.
They are being told that, unless they agree to subsidise a new nationwide "fuel poverty" scheme aimed at the 4.5 million poorest households, a levy will be put on their profits. It is understood that the fuel poverty programme is to be unveiled by Alistair Darling, the Chancellor, as part of the Budget on March 12.
The Government has moved to curtail what is increasingly seen as "excessive profiteering" by the utilities industry, with customers having to pay soaring household gas and electricity bills.
This comes only weeks after the major energy providers raised prices by as much as 15 per cent. The biggest utility, Centrica, recently announced a £571 million profit from its residential energy business British Gas, which serves 16 million customers.
Campaigners have demanded action against the big utilities, with the union Unison and the National Right to Fuel Campaign describing their profits as "obscene".
The series of Downing Street summits, which are being held over a seven-day period spanning this weekend, reflects frustration in Whitehall about the way the Government - rather than the profit-laden utilities - has become a focus for consumer anger over the failure to control sky-high energy prices.
advertisement
Last week, the chief executives of Scottish & Southern Energy, the country's second-largest provider, and Npower, the fourth-biggest, were ordered to attend meetings in Downing Street. The Government was represented by Yvette Cooper, the Permanent Secretary to the Treasury, Malcolm Wicks, the energy minister, and Geoffrey Norris, a No 10 adviser.
Over the next few days, they will be followed by their counterparts at Centrica, Scottish Power, E.On and EDF Energy, which owns the former London Electricity business.
The threat of a windfall tax on profits comes a week after Ofgem, the energy regulator, announced an inquiry into competition.
The Government's move reflects a broader hardening in the stance of industry regulators towards the utilities. National Grid, the company that distributes energy across Britain, was fined £41 million by Ofgem last month for allegedly restricting competition in the domestic gas meter market.
National Grid has said it will appeal against the fine, which was among the largest ever imposed on a British company.
Dave Prentis, the Unison chief, said: "Hard-working families are desperately worried about increasing fuel bills. Pensioners are finding it a huge struggle despite winter fuel payments that have been wiped out by these greedy companies."
Lesley Davis, the chairman of the Right to Fuel campaign, claimed energy company profit margins had soared by £2.5 billion in the past three years.
Charities, including Age Concern, Help the Aged, Save the Children and Barnado's, have expressed their concern at the social implications of rising fuel bills.
The major energy companies mounted a fierce defence of their profits and record at supporting poorer consumers.
A British Gas spokesman said its "social tariff", called Essentials, aimed at poorer consumers, had 340,000 customers, with a target to extend it to 750,000.
"To offer further help for up to 25,000 of our most vulnerable customers, British Gas has launched a winter protection package, called Winter Warmer, which includes a rebate of up to £90 and free insulation."
One utilities industry executive said the investment required to overhaul Britain's ageing power stations and other spending on infrastructure would be up to £50 billion during the next decade.
"The Government makes more money out of the energy industry than the companies do because of the tax burden it has placed upon them," said the source.
A Treasury spokesman said: "Taxes are a matter for the Chancellor during the Budget process."
Allan Asher, of the consumer watchdog Energywatch, welcomed the Government's action, but said: "They have left it far too late.
"Companies have been abusing consumers for too long while the Government has stuck its head in the sand. Companies are profiteering from the poor and it is outrageous and immoral."
He claimed tens of thousands of people die every winter from hypothermia and respiratory diseases because they cannot afford adequate heating.
This is why our system (if it were run correctly) is so much better. In a free market companies strive to provide the best service in order to make the most profit and gain the most customers. With NannyState here...what's the motivation for the companies to provide the best service if they know the profit ceiling they'd encounter? What's that old people it's -50 degrees out and you're power and heat are off. Ya we'll get to it...next quarter. If we make any more money from offering goods and/or services...the government will take it.
Suck my balls, you socialists. After all...in your system everyone gets a share whether or not they deserve it.
X
Pages: 
Cry freedom! (Read 165846 times)
