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Consumers were left furious today as British Gas’ parent company posted almost £1 billions worth of profit for the first half of this year just one day after announcing huge price rises for their customers.
Customers were told there would be energy price hikes across the board with some people facing an immediate 44 per cent rise in their gas bills. Today, Energywatch, a consumers’ group, concluded: “Prices are going up because £992 million profit in six months isn't enough.”
Centrica, which owns British Gas, made its profit announcement on the same morning that Shell, the world's second biggest oil company, posted a near £4 billion profit in the last quarter while petrol prices continue to soar.
"British Gas customers, still reeling from 35 per cent price hikes, might have expected Centrica to be losing money,” said Adam Scorer, Campaigns Director at Energywatch.
“They will be staggered at the rude health of Centrica's half year profits. Customers will be outraged to learn that while they ponder how to make ends meet Centrica’s shareholders are enjoying an increase in their dividends.”
Energy companies have cited rising global gas and oil prices to explain why they had increased the price of petrol at the pumps and the cost of supplying gas to homes in the UK.
British Gas customers face average increases of 35 per cent on gas and 9 per cent on electricity, pushing up the average bill by £400 to just over £1,300 a year.
The energy price rises have left vulnerable, disabled and elderly consumers unable to afford to use their cars or heat their homes.
A spokeswoman for Age Concern said: “It just seems outrageous to us that companies can come out with such big price rises at the same time as posting huge profits.
“Many older people will find it difficult to understand how such enormous profits are being made whilst they are struggling to afford rocketing energy bills.
"Energy companies say they can’t absorb wholesale price rises, but in light of their profits this will sound hollow to the one in three pensioners likely to be in fuel poverty this winter.”
Age Concern is calling for the Government to legislate and force energy companies to improve social tariffs for low-income families and elderly or vulnerable people. In the absence of legislation, consumer charities are calling for the multinational energy companies to voluntarily put some of their profits towards schemes to end fuel poverty.
A spokesman for the National Consumer Council said: “When people are facing the largest energy prices ever, the energy companies could do more to shield them from the worst effects of rising energy prices.”
Royal Dutch Shell, which runs the Shell garages in the UK, attributed their rise in profits to the soaring price of oil, which touched a record high of $147 earlier this month.
However, consumers are routinely told that the price at the pumps is being forced so high because distributors are being forced to pay more for the oil they convert into petrol.
TransAction 2007, the fuel protest group responsible for blockades in London earlier this summer, agrees that the Government should step in to limit the profits of energy companies.
“There’s another example that everyone is profiting out of the oil price surge,” said Peter Carroll, a spokesman for TransAction. “The Government should ruthlessly tax hedge funds and companies speculating in oil. They should stop oil companies being master of exploitation, production, distribution and retail.”
Last weekend, Gordon Brown rejected the demands of union leaders and Labour backbenchers, who called for a windfall tax on energy companies.
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Similar to the truckers, let's self-organise into one huge collective and protest by refusing to pay our gas and electricity bills until prices are fixed at early 2008 rates. Why isn't there a politician standing up and arguing for this type of action?
Daren, Chelmsford,
If ever a country needed to become a "Nanny State," that country is Gray Britain...! - on every side its people preyed upon by private business interests, lethally dehumanized youth and self-serving politicians; whose collectively ruthless greed unmistakably betrays the ugly face of capitalism...!!!
John Jay, Walton on Thames, UK
It's time to go nuclear and make our own energy. Oh and by the way if Centrica and EDF are thieving... go with someone else! I am with E-on capped for a year so there's no 35%! By the way apart from jumpers you can use insulation, wood stoves etc etc Gas isn't everything you know!
Alex K, Manchester, UK
Gary, Hitchin, Labour could have reversed Thatcher and her privatisation policies, but no, true Labour they just take the money, nothing has ever changed with Labour since Wilson's time in the 60's!
David, Nottingham, UK
Our love affair with energy consumption drives the prices and the profits--much of which will be invested in researching alternative energy sources by the energy majors. Current energy sources are very much a function of supply and demand; as supply is finite, prices will fall if demand softens.
John Gibbons, Castlebar, Ireland
Miss Dee is absolutely right. When you turn essential services over to private companies whose raison d'etre is to realise a profit, who do you think will be served? Customers or shareholders? I'm amazed that people are surprised by this.
Josh S, Manchester,
It may be £992m profit, but that is still only a 10% return on their revenue of £10bn, not all that much. Plus that is pre-tax, which at an effective rate of 58% drops the profit to approx £410m, or less than a 5% return. How many of you would be happy if you ran a business and made only 5% profit?
Sam, Cardiff,
Thatcher and her privatisation policies has a lot to answer for.
Wearing a jumper, what effect will that have on a company that's making 2bn a year profit?
They need to be forced to charge a single tarriff across the whole of Europe - then see what happens.
Gary, Hitchin,
Everyone please stop whining and do the maths. They made a profit of £992 million, then paid £575 million in taxes, leaving an after-tax profit of £416 million. Their revenue was roughly £10 billion, which means their profit margin was a paltry 4.16%. That's hardly unreasonable.
Neil, London, UK
And all this is set against a background of 200 years of coal available to the British. See British Coal Authority report of September 2001 to the Cabinet which contrasts that figure against only 50 years of petro/oil fuel available. That really is kindergarden economics even for Brown.
Robert Norris, Hull. , East Yorks.,
Who are these people who make these decisions? Executives who cream off so much money and leave everyone else to survive on whatever they can. Welcome to the selfish drive of the 21st century....
Michael , London, UK
...Easy! You just pay less on your bill - you pay what you think it should be (within common sense, of course). My son sells EDF at Sainsburys and says it is not just them, it's all the gas companies that have rallied... Can the EU help sort these price hikes? Or are they there in name only?
Ann, Fl, USA,
No, the french pay less because EDF are essentially the french government, and they use the revenue raised from us, to subsidise their domestic customers for political benefit. Privatisation of energy companies and subsequent ownership by a foreign government has shafted us good and proper.
Steve , Norwich,
Beth from Northampton. Energy is more and more a global resource now and increasingly these firms are larger and operate over larger geographic areas. If you don't buy the energy....someone else probably will. But a sweater and a lower thermostat do make sense anyways.
phil, sacramento, usa
Its entertainig because I just read the New York Times which reported approx 11 billion qarter profits for Exxon-Mobile. It was said so passingly ! No comment from consumers stateside, apparently
Kat, Blacksburg, VA, USA
There is one political party whose policies include the renationalisation of the former utilities to be run for the common good. Some may consider other policies of the BNP distasteful but I believe that this one merits some consideration
Phil, Keighley, West Yorkshire
So much for pricing equality and transparency in Europe! Plainly EDF need to be put out of business, their leaders imprisoned for racketeering. This is an excellent opportunity to re-invade France and finally put some good use to the Tunnel.
Will, Lincoln, UK
I suspect the french pay less because much more of their energy comes mostly from Hydroelectricity and Nuclear plants, rather than Natural Gas. Making them less sensitive to changes in the wholesale price of fossil fuels.
Ed, London,
Lets go nuclear.... We have the technology available to put the gas companies out of business
chris, Cardiff,
the problem is, us Brits as per usual will moan but take no action! I remember an old saying...actions speak louder than words; these companies only listen to action not words.
Paul hoque, Norwich, Norfolk
Agreed Miss Dee, but these are windfall profits and should be taxed as such!
Alan, Salina, Malta
It is not a question of legality, but morality. Companies normally have some sort of ethical policy. It just depends on the extent of the policy and how seriously it is followed. Without looking this up, it seems the energy companies either won't follow, or don't have such policies.
D Virdee, London,
How does EDF justify charging UK customers approx 12.6 pence per kW of electricity when they charge the French 0.6 pence - yes half of one penny - for each kW of electricity. If the situation were reversed the French would riot and the French government would force prices down. Brits
Tony Pugh, preston, UK
Enough is enough. Isn't it about time this spineless labour government stood up for the electorate who it supposedly represents, and slammed these profiteering & price-fixing energy companies where it hurts with massive windfall taxes?
Steven H, Bristol, UK
The energy companies are not doing anything illegal. If society is such a concern, then you shouldn't put a for-profit company with shareholders in charge. It's not rocket science. Centrica is just doing what comes natural.
Miss Dee, Tayside, UK
We need to rally together - don't put your heating on this winter put on an extra jumper and try to avoid using your cars. Lets force them to reduce prices!
Beth, Northampton, England