A group of international investors is interested in buying UK water supplier Severn Trent, the company confirms.
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Energy supplier SSE is fined £10.5m by Ofgem for “prolonged and extensive” mis-selling, the regulator’s biggest ever fine for a supplier.
Read the original: SSE fined record £10.5m by Ofgem
British Gas, the biggest energy supplier in the UK, unveiled an 11% increase in profit as campaigners warn of rising fuel poverty
The acrimonious debate over soaring energy bills and mounting fuel poverty reignited when British Gas – the biggest energy supplier in the UK – unveiled an 11% increase in profits and its parent group, Centrica, promised a £1.3bn handout to its shareholders just months after pushing through an increase in household bills.
Campaign groups warned that 160,000 children had been dragged into fuel poverty by the actions of the big six energy suppliers since 2010, while trade union bosses accused energy chiefs of “creaming off” profits. Dividends of more than £3.5bn have now been paid out by Centrica over the last five years. Anger was exacerbated by confirmation that Phil Bentley, British Gas’s managing director, will stand down with a combined pay and pension package worth more than £10m.
British Gas imposed a 6% price rise last November, adding £80 to the average annual gas and electricity bill for the 8.4 million households it serves.
Centrica argued that the average profit figure of £50 per British Gas household represented a profit margin of only 5%, which it said was a similar return to supermarkets.
The company said the profits had allowed the energy group to invest £50bn to secure new wholesale gas supplies from countries such as Norway and Russia.
“It’s important that Centrica makes a fair and reasonable return so that we can continue to make our contribution to society and to invest,” said Sam Laidlaw, the chief executive of Centrica. “Last year we incurred a tax charge of over £1bn and invested over £2bn to secure new sources of energy for the UK, well in excess of our profits.”
But the campaign group Fuel Poverty Action warned that the British Gas profit of more than £600m would send a “shiver down the spine” of customers, with some facing the choice between heating and eating due to recent price hikes.
“These profits were made on the back of forcing millions into fuel poverty and from a ‘dash for gas’ that will send bills even higher as well as contributing to rising food prices through climate change,” said the campaign’s spokesman, James Granger. “People are angry and want the alternative to the big six’s monopoly: cheaper, clean, renewable energy under the control of communities, not greedy energy tycoons.”
Centrica reported operating profits of £2.7bn – up 14% – and announced plans to hand an additional £500m to shareholders this year by buying back, and then cancelling, its own shares. The process should increase the share price.
Nick Luff, the finance director, said it was fair to give back cash to investors because Centrica had raised £2bn from them in 2008 to invest in new nuclear power stations. It has now dropped those plans.
He urged customers to “take action” by installing more efficient boilers, improving insulation and utilising new technology such as smart meters.
The Energy Bill Revolution, a campaign group formed by charities including Barnardo’s plus old age and disability groups, warned that an extra 160,000 children had been forced to live in homes in fuel poverty over the last two years.
The organisation warned that a further 25% increase in power bills could double the total number of people affected from 1.6 million to 3.2 million. It called on the prime minister to end the “growing scandal” of cold homes by using a carbon tax to make all UK homes super energy efficient.
Meanwhile Dave Prentis, general secretary of the Unison union, said it was a scandal that so many children were now living in freezing homes while shareholders and directors were “creaming” off profits.
“The rise in fuel poverty is a blight on this country with hundreds and thousands of people joining the growing numbers now spending more than 10% of household income on energy costs. Without action we are sleepwalking into a very cold and dark future,” he warned.
The issue of soaring energy bills combined with fines for doorstep mis-selling and other abuses by the gas and electricity suppliers has triggered a raft of initiatives by the industry regulator, Ofgem, but campaigners and even politicians believe they are not nearly tough enough. The Labour party has said it will scrap Ofgem while a report by the all-party House of Commons energy and climate change select committee in December attacked the regulator’s timidity. “We find it unsatisfactory that Ofgem should be so hesitant about launching preliminary investigations into potentially anti-competitive behaviour,” it said.
The general climate of unease has not been helped by a Financial Services Authority inquiry into concerns about irregular trading in the wholesale gas market. Centrica and the other large energy companies such as RWE npower and E.ON have all instigated their own internal inquiries and say they are convinced none of their traders are at fault.
Bentley, the 54-year-old former BP executive who has been at the centre of previous rows over the scale of big six energy company earnings, plans to leave British Gas by the end of the year and is apparently hoping to become a chief executive elsewhere. But it was also revealed that the energy boss will be able to retire in four years time with an annual pension of £225,000 after working for the company for little over 12 years.
A statement from Centrica paid tribute to his role in “profit improvement”.
It said: “In his most recent role he [Bentley] has been instrumental in restructuring, reinvigorating and materially improving the performance of the business by raising customer service standards, lowering costs, increasing productivity and creating significant value from profit improvement.”
A Kent landlady has said she may be forced to close her pub after a mistake by her electricity supplier left her facing a £17,000 bill.