RUBBER-TOOTHED energy watchdog Ofgem and the government are going through their annual hand-wringing ritual of expressing concern over planned price rises imposed by gas and electricity corporate vultures. Npower, a subsidiary of German transnational RWE, plans to push up electricity tariffs by 15 per cent and gas prices by 4.8 per cent from March 16.
Managing director Simon Stacey noted sadly that this had been a “hugely difficult decision.”
These are the highest increases imposed in the industry for almost a decade and, as usual, the fault lies with everybody except Npower.
It highlights higher wholesale energy costs, installation of smart meters and government insistence on a degree of renewables in the energy mix.
Ofgem counters that suppliers could moderate price rises by buying energy in advance, which many companies claim to have done — usually to explain why sudden falls in wholesale prices cannot be passed on to consumers.
“Npower must therefore justify the decision to its customers,” the doughty people’s champion proclaimed as though unaware that regulation is why Ofgem officials are paid so handsomely.
Similarly, Downing Street said that Prime Minister Theresa May was “concerned,” claiming that the government was committed to getting the best deal for households. Its Business and Energy department insists that wholesale prices remain significantly lower than in 2014. This means that the only justification for swingeing price rises is unalloyed corporate greed.
British Gas, Eon and SSE will hold current prices until March 31, while EDF cut gas tariffs by 5.2 per cent last month and will jack up electricity charges by 8.4 per cent from March 1.
Npower is probably the worst-performing member of the big six cartel that rigs the energy market in Britain, but there is little doubt that the other five will tuck in behind their outrider after a suitable period of restraint to explain, with regret, that they must do something similar.
Npower made annual profits of £313 million in 2012, £390m in 2013 and £227m in 2014 before recording a loss of £106m for 2015. This was despite raising prices by, for instance, 9 per cent in November 2012 and axing one-fifth of its British workforce while internal failings caused a rash of billing problems that saw over 350,000 customers walk away from Npower. It was also fined £26m for “failing to treat customers fairly.”
Why should the company’s remaining consumers carry the can for managerial inefficiency? Let its shareholders take the hit. When Margaret Thatcher’s Tory government privatised the gas and electricity public corporations, the justification was to secure much-needed investment and near-mythical private-sector managerial efficiency and ingenuity.
The reality of privatisation was predictable given the short-termism of Britain’s capitalist class.
Major shareholders bought out the minnows seeking an immediate reward, sacked huge numbers of staff, drove up the share price and maximised profits by flogging the companies to global transnationals.
Providing a service to consumers in Britain has barely merited consideration, which is not the privateers’ fault. That’s how they operate.
The fault lies with the political establishment as Tories, Liberal Democrats and New Labour have been content to tolerate consumers being ripped off while an utterly useless “regulator” provides a fig leaf of governmental concern.
What will it take for Ofgem and the government to move from idle chatter to action? It’s time to admit that energy privatisation has failed and that the gas and electricity industries must return to public ownership and accountability.
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