Energy firms raised prices despite drop in wholesale costs

[Ardemax]

Some of Britain's big six energy companies have seen their wholesale electricity costs fall over the last three years while still putting up prices for millions of households.The figures will put yet more pressure on the firms to explain why bills and UK profits have been going up, as they appear before a influential House of Commons committee of MPs.

According to Ofgem, Npower paid an average of £59.61 per megawatt-hour for electricity in 2010. The average wholesale price fell by 4% to £57.32 in 2011 and rose by less than 2% to £58.39 in 2012. The company increased retail prices by 5.1%, 7.2% and 9.1% respectively in those years.

Similarly, EDF paid wholesale prices for electricity supplied to households of £58.16MWh in 2010, falling by 0.6% to £57.82 in 2011 and rising less than 5% to £60.68 in 2012. In those years EDF's electricity prices to customers went up by 7.5%, 4.5% and 10.8% respectively.

Meanwhile E.ON paid £57.64MWh for its electricity in 2010, rising by 7% to £61.82 in 2011 and falling by 4% to £59.44 in 2012. It raised its power prices twice by a cumulative 20% in 2011, before cutting them by 6% in 2012.

Asked why wholesale prices appeared to be out of kilter with increases in bills, companies said network and environmental costs had been the biggest factor in higher electricity bills, which are now around £600 a year on average. However, figures from Ofgem indicate electricity network costs have only risen by £10 in each of the last four years, while green costs are rising by a similar amount. Green and social levies make up £112, or less than 9%, of the average household energy bill.

With four of the big six – British Gas, Npower, Scottish Power and SSE – announcing big price rises in the last few weeks, the companies are under increasing pressure to justify the increases, after figures from the energy regulator suggested the profit margin made by the companies per household has more than doubled from £45 to £95 over the last year. Ofgem said wholesale energy costs have gone up by just £10 in a year, while VAT, operating and other costs are up £40. The energy companies dispute this analysis and point to higher wholesale costs this winter.

Downing Street yesterday said energy companies should account for the latest round of price rises, which have averaged 9% this autumn. Energy bill increases are continuing to cause a headache for the coalition, as a new YouGov poll shows 68% of the public believes Labour's energy price feeze is workable.

Caroline Flint, shadow energy secretary, called on the companies to "come clean about why they are imposing yet another round of inflation-busting price rises this winter, when they are already making huge profits".

"Revelations about rising profits and the growing gap between wholesale costs and household energy bills highlight why answers are needed," she said. Which?, the consumer group, yesterday called on the chancellor to tackle rising bills. The group said it wants the companies broken up and an end to the "blank cheque" of allowing energy companies to charge customers whatever they like for a government scheme to cut energy usage for poorer households.

Read more: http://www.theguardian.com/business/...all?CMP=twt_fd

LET'S PRIVATISE EVERYTHING GUYS /s

[-:Undertaker:-]

Cut the ridiculous green taxes, stop government interference in infrastructure and leave the EU to establish an independent energy policy.

Government caused this shambles of an energy policy (which i've been posting on this forum for years) - more government isn't going to solve it.

[AgnesIO]

Cut the ridiculous green taxes, stop government interference in infrastructure and leave the EU to establish an independent energy policy.

Government caused this shambles of an energy policy (which i've been posting on this forum for years) - more government isn't going to solve it.

Eu.. policy?!

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Whilst I agree government taxes are evidently a problem, can we be honest here and say that these firms are raising the prices because they can, not because they have to.

[-:Undertaker:-]

Eu.. policy?!

Energy is increasingly an EU policy area meaning we're completely hapless when it comes to one of the most important and fundemental jobs any nation state can make for itself - aka keeping on the lights. It's true that our own politicians are hopeless as Hitchens says, yet as with so many issues: first step is to leave EU, then sort out our political class.