Justice not jumpers

As more and more people face a choice between eating or heating this winter, it’s high time the ‘big six’ energy companies begin to feel the heat, says Ewa Jasiewicz

January 19, 2014 · 8 min read

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There’s a hate figure unifying British public opinion – and no, it’s not George Osborne. It’s the ‘big six’ utility companies running our domestic energy system. Npower, EDF, EOn, ScottishPower, Centrica (British Gas) and SSE (Scottish and Southern Energy) have all hiked prices over the past four years by on average 10 per cent per year. Over the past decade, UK electricity prices have gone up by 120 per cent and gas by 190 per cent.

Recent surveys have found that the great majority of the British public thinks the rise in bills is due to corporate profiteering (84 per cent, according to Which?) rather than so-called ‘green taxes’. The public wants renewable energy – according to a Department for Energy and Climate Change survey, 76 per cent support renewable energy, compared with just 37 per cent for nuclear.

But the government and energy companies are continuing to ignore sustainable and democratically-controlled energy solutions. Instead they are opting for gas (currently accounting for 27 per cent of our energy mix), coal (38.4 per cent) and nuclear (20.6 per cent), with EDF having just been given the go‑ahead for the first in a new generation of nuclear plants at Hinkley Point, Somerset. Renewables account for just 11.3 per cent.

Rigged market

The privatisation of the UK energy system in the 1990s, for all the talk of competition and ‘shareholder democracy’, ultimately handed over a flawed public service to a small number of monopolistic and unaccountable multinational businesses. The result has been an effectively rigged market controlled by six companies banding together, hiking prices in unison and turning similar tricks on fixed tariffs (which can in fact change) and complicated price plans (there are currently at least 900 to ‘choose’ from).

For every 1 per cent price hike, 40,000 more people are plunged into fuel poverty (see Alan Simpson, page 20). At the same time, the government is cutting winter fuel allowances for the poorest and most vulnerable. Pre-paid meter users – numbering approximately six million – are in the lose-lose situation of paying up to £300 more per year for their energy and being in charge of cutting themselves off when they can’t afford to top up.

The big six were accused by one small energy supplier at a House of Commons energy and climate change committee hearing at the end of October of systematically overcharging customers by £3.7 billion per year. Stephen Fitzpatrick, the chief executive of Ovo Energy, calculated that this was the extra revenue the big firms earned by putting customers on the most expensive tariffs compared to a price based on the actual cost plus 5 per cent profit. The energy regulator Ofgem told the same committee that wholesale energy costs had risen by less than the rate of inflation over the past year – £10, or 1.7 per cent, on the average bill – network costs by £15 and ‘green taxes’ by just £10. Yet typical bills were rising by more than £100, taking the average to £1,315 a year.

Meanwhile, it was revealed recently that 340 MPs claim their energy bills on expenses, with one Tory MP claiming £5,882 in 12 months – four times the average bill. Npower chief executive Paul Massara offered some advice to customers who don’t enjoy the same privileges: ‘The cheapest unit of energy is always the one that isn’t used and we can offer plenty of advice on how you can cut down on your energy usage.’

Making a killing

The Red Cross has announced that this winter it will be distributing food aid to needy households in the UK for the first time since the second world war. With weather forecasters warning of a ‘big freeze’ over the coming months, the big six could literally be making a killing. Official figures suggest that there were 24,000 extra deaths in England and Wales during the relatively mild winter of 2011/12, while the World Health Organisation estimates that 30 per cent of winter deaths in Europe are due to people living in inadequately heated homes. That would mean 7,200 deaths due to cold homes, with elderly and disabled people affected most.

Last year Fuel Poverty Action campaigners occupied Stratford’s Westfield Shopping Centre with the Greater London Pensioners Association and Disabled People Against Cuts, in protest over the fact that thousands are forced out of their homes and into shopping centres and libraries just to keep warm. Mothers pushing prams stopped to take leaflets, explaining to us that it wasn’t just elderly and disabled people using shopping centres to warm up but it was them and their children too.

Cosy relationship

Energy companies have not just enjoyed a cosy relationship with policy-makers; it seems they are policy-makers. Department of Energy and Climate Change (DECC) ministers have met representatives from the energy giants on 195 occasions since 2010, yet have held talks with the main groups representing energy consumers only 26 times during the same period. Energy companies, including Centrica, EDF and Npower, have placed staff in government departments on secondments – some funded by the taxpayer – since 2008, with two dozen in place at the heart of the energy department at the end of 2012.

According to one industry source quoted in the Guardian, ‘EDF and Centrica are now just an offshoot of DECC – they are all so in bed with each other they are indistinguishable. Another lobbyist said: ‘DECC is under the strong impression that it cannot do the things it wants to do without the big six – it just simply doesn’t believe it is possible’.

Perhaps the most glaring example of the big six defending their interests against the corporate disempowerment that renewable, community-controlled energy represents is the attack on ‘green levies’. The levies – which support low carbon energy and insulation for poorer households – represent less than 10 per cent of an average bill. The largest component is actually nuclear energy (£26), compared with £4 for renewables. The chancellor has recently announced plans to axe the levies and meet the costs through general taxation, amounting to a £75 annual saving for customers. Ed Miliband wants to freeze prices for 20 months. Neither are enough.

The cosy relationship between the government and the energy industry is also clearly evident over fracking. Andrew Griffin, CEO of energy sector spin doctors Register Larkin, remarked at the recent European shale gas and oil summit in London that the shale industry and the Conservatives were ‘joined at the hip’ on the subject. The supporters of fracking are now busy conscripting the alleviation of fuel poverty to their cause. Fracking will bring down bills, claims the pro-fracking lobby, despite the top fracking company Cuadrilla, the International Energy Agency and Bloomberg all admitting that it won’t.

Pretending to care about people in poverty is powerful and the companies are determined. The Isle of Man-registered 3Legs Resources drilling company’s ‘community engagement’ strategy for fracking in Poland – which has the largest shale gas reserves in Europe – includes assuaging parents’ fears of lorries running over their children by providing them with high-vis vests for their daily school walk. The message is clear – we will take all precautions not to kill your children accidentally, but this is a juggernaut that cannot be stopped. You adapt, because we’re not budging.


Meanwhile, a different kind of adaptation is gaining popularity among some energy consumers. ‘Auto-reduction’ – the practice of re-wiring pre-payment meters to freeze one’s own costs – is increasing across the country. It’s not something that people shout about, for obvious reasons, but despite its individualisation can have a more immediate appeal than a public campaign of mass non‑payment.

Fuel Poverty Action is linking up with those hit hardest by fuel poverty to take direct action for a mixture of community and publicly owned energy. We want to bring down the big six, we want to heat and eat, and we want renewable energy under public control – for ourselves and for the sake of the climate. Public opinion supports these demands and is moving faster and further than the political parties can spin or accommodate. The seemingly radical has become rational.

This winter we’re teaming up with UK Uncut, the Greater London Pensioners Association and Disabled People Against Cuts to take on fuel poverty perpetrators – government and corporate. The issue of fuel poverty impacts us physically, and links us intimately to the commons we need to reclaim – our energy, our climate, the right to warmth and shelter. If we win this fight, and it is winnable, then taking back more out of private profit – our transport system, our health service, water, land, education, freedom of movement, our own labour – can become achievable.

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