Is there a widening gap of energy company profits?

Posted in: Energy and Heating

Energy firms have been profiteering for years… recent studies carried out by university statisticians prove what most people in the UK already know – have known for years: our biggest energy firms have been profiteering for years. Dr Nathan Green of Manchester University said: “There is a clear trend and this shows a widening gap between the price consumers pay and the whole cost paid by the energy companies.‹¯¨

British Gas and EON have been raising domestic heating fuel bills for years: citing the same old excuse of ‘continuously increasing wholesale prices’

In these present times of austerity and uncertainty, the cost of domestic energy is a major concern for householders in the UK. We are a country described as ‘fuel poor’, this dubious title is awarded when a household spends 10 per cent or more of its income on electricity and gas, and the number is rising.

Taking into account seasonal variation, hit and miss fluctuations and the inevitable time lag between wholesale costs rising and retail prices following, at no time the energy companies are losing money: that misfortune, again, falls on the consumer.

The variance between wholesale fuel costs and domestic retail prices has long proved a source of frustration for consumers…everyone along the chain makes profit: it is the householder who must suffer the hardship. Wholesale prices tend to fluctuate, they suffer quite large, sudden, but temporary – either – rise or fall. Domestic prices, the ones we pay however, increase swiftly in response to these wholesale ‘spikes’: however, they tend to fall very much slower. So, when wholesale prices fall, energy suppliers are extremely slow to pass on any savings to the consumer.

But this isn’t news! Dr Green’s simply expressed in figures what we already knew: the big six energy suppliers have been charging an average of £1.93 per 100 kilowatt hour greater than the wholesale price in early 2004. By 2010, this figure had risen to more than £4, dipping to a low of £2.73 in the summer of 2011

In the meantime, and despite these rising energy bills, you can still actually save money by utilising energy more efficiently.

Many of us are quite unaware on how to use energy more efficiently, but simple changes to your daily habits can have a huge effect on the gas and electricity bills that drop through your letterbox every quarter. Rising energy prices are a powerful incentive to look at our homes and how we power and heat them. In the short term, one of the quickest ways of reducing your heating bills could be to switch supplier.

Whether you are happy with your present supplier or even if you have switched recently, your energy provider is a great source of free advice on reducing your energy bills.

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26 June 2013