LONDON, UNITED KINGDOM — (Marketwire) — 03/29/12 — After two harsh winters, Britain–s energy companies had over-stocked their supplies, and then cut prices to win new custom. Consumers are now enjoying low electricity prices, despite the Arctic conditions.
The –big six– energy companies have all cut bills by about 5%. However, some consumer groups are uneasy about the nature of these cuts. The big six – British Gas owner Centrica, German-owned E.ON and RWE npower, SSE, French state-owned group EDF and Spanish-owned Scottish Power – don–t all give a satisfying breakdown of costs.
Adam Scorer, Director of Policy and External Affairs at Consumer Focus, said: “This narrowing of costs must be reflected in consumer prices.
“The widening gap between wholesale and retail has become the fault line for consumer confidence. Companies want to regain the trust of their customers. Narrowing the gap is a necessary part of achieving this.”
However, Centrica has set out that it makes just GBP 5 profit for every GBP 100 on a gas or electricity bill. On a gas bill, for instance, it argues that GBP 56 is typically the cost of wholesale gas, GBP 4 goes on government environmental contribution, GBP 21 is the cost of delivery to the home, GBP 8 is spent on operating costs, and GBP 6 for VAT and corporation tax.
Lawrence Slade, Chief Operating Officer of the Energy Retail Association, points out that the average profit per customer has actually fallen to GBP 80. Mr Slade concedes that energy firms accept the current focus over profits and pricing. He says that “Close scrutiny of company profits is understandable at a time when global energy prices have been rising – as supply struggles to keep up with growing demand – and consumers want reassurance that prices are fair.”
Following reduced bills and an increasing awareness that many energy companies are offering reasonable prices, consumers are looking to cut the VAT charge on gas and electricity.
“If Britain isn–t to carry on freezing, we need a helping hand,” said Ann Robinson of uSwitch.com. “I would urge the Government to axe the VAT on gas and electricity so that every household can enjoy some respite and not be forced to go cold next winter. “Reducing bills by 5 per cent through zero-rating the VAT could take 250,000 households out of fuel poverty and give much-needed help to millions more who are struggling to keep warm.”
Contacts:
Felicity Callaghan
+44 (0)7769 542 360