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Friday 19th
posted by Morning Star in Editorial

ENERGY union GMB is right to believe that its members working for British Gas and its parent Centrica should be in line for a good pay rise.

The massive profits gouged out of domestic consumers by the six-company cartel that dominates Britain’s energy market could well fund higher wages and lower prices.

But GMB negotiators will not be surprised to hear the usual mealy-mouthed excuses by company representatives when they get together.

British Gas insists that increased energy demand is the sole cause for its profits leaping from £439 million in 2014 to £574m.

But the reality is that consumer costs were already too high and were increased beyond any reasonable justification.

Wholesale costs have fallen consistently, enabling the company to reduce exploitation of its customer base.

Well-named Centrica chief executive Iain Conn, who laments that the parent company has seen adjusted operating profits drop by 4 per cent to £863m, had the temerity recently to petition the government to reduce the petroleum revenue tax because “the North Sea is really hurting.”

No-one would doubt, given the Tories’ readiness to prioritise the interests of transnational corporations, that they will play ball with Centrica.

Yet even Energy Secretary Amber Rudd wrote to the firms last summer demanding a price reduction in light of the Tories’ general election victory.

The big six energy companies had claimed, in the face of soaring profits, that they hesitated to charge less because they feared Labour’s return to office because of Ed Miliband’s pledge to freeze tariffs for 18 months.

Toothless energy lapdog Ofgem noted that the industry’s average profit margin had risen to an unprecedented £120 per household — up nearly a third in a year.

Subsequent price cuts have not matched the wholesale cost reductions, by dint of falling oil and gas prices, enjoyed by cartel members.

Wholesale gas prices have fallen by 41 per cent since 2014, while electricity has dropped by 29 per cent.

British Gas, in common with four others of the big six, has been most cynical in waiting until next month to put into effect a 5.1 per cent trimming of domestic gas prices when major demand tails off as temperatures begin to rise.

As usual, the government, Ofgem and other apologists for continued private ownership of the energy sector’s natural monopolies put the onus on consumers to switch provider to take advantage of the best deals.

Shadow energy and climate change secretary Lisa Nandy insists that the Competition and Markets Authority should “change the rules of the game.”

While accepting that “too many families are still being ripped off by big energy companies who are prepared to chase profits at any cost to their customers,” she rejects returning the industry to public ownership.

Nandy has pointed to different models in Germany and local initiatives in Nottingham and Plymouth, but there is little point in tinkering with the fringes of the industry.

Jeremy Corbyn pointed out during the Labour leadership election that each home has a single gas pipe and a single electricity supply cable.

Nothing encapsulates better a natural monopoly capable of offering every consumer the best deal rather than condemning them to search for the holy grail while the big six shareholders lap up the cream.

Just as the rail unions identified taking back franchises as they expire as the cheapest way of renationalising our railways, buying out the big six may not be the best way to end the great energy rip-off.

But the key priority is to take the decision in principle that the rip-off must end and a common solution found.