A virtual CEO explains why energy profits are on the up
Energy suppliers often tell us they don’t make a lot of money from selling gas and electricity, but as huge profits are announced, it prompts the question, ‘am I paying a fair price for energy?’
Yesterday morning it was EDF’s turn to announce a 4.6% increase in profits during the first six months of this year. This followed last week’s news that British Gas recorded a 23% increase in profits.
How do you solve a problem like rising profits?
I am going to play devil’s advocate now. Don’t take this the wrong way – I am taking the liberty of putting my place in the role of being a virtual energy chief exec who has to explain profits to my customers. Here’s what I might say:
- ‘Look at the weather! It’s been colder than usual this year and I’ve made more profit because more people had their heating on for longer.’
- ‘It may seem to be a big increase for 2012, but it looks worse than it is. Last year people cut down on their gas and electricity. It’s really unfair to compare last year with this one.’
- ‘I’m not making money from selling gas and electricity to customers, the profit is from the generation side. Actually, I’m losing money from the retail side of the business!’
- ‘I need this money to invest in the future to keep the lights on.’
- ‘Anyway it’s not me taking all of the money from you, the government forces me to charge you for all sorts of things which I have to add on to your bills.’
I’ll stop now, you probably get the picture, and it’s actually quite difficult for me to stay in character! Also, I’m still not convinced by my own excuses – especially as so many people are really struggling.
Just last week the Which? Quarterly Consumer Report found that debt levels were at their highest since the 1980s, at £1.5 trillion. More than one in four people said they would try to cut back on food, and energy bills are one of our top concerns. Some people told us they had defaulted on their household bills last month.
Are we getting a fair deal?
Which? isn’t against companies making a profit, as long as it’s transparent that consumers are getting a fair deal. We also want to encourage unhappy customers to vote with their feet and switch company if they feel hard done by. So for both of these reasons it’s important that energy suppliers work hard to show that they are not making unjustified profits at the expense of their customers.
So what do you think energy suppliers could do to convince you that you’re getting a fair deal and that they deserve their profits? More information on your bill? A comparison breakdown of all the suppliers’ profits and details of their income and spending? Also, what do other companies do to convince you that they deserved their profits and that you are still getting a fair deal?
As a ‘virtual’ energy CEO (for the morning) I really need your ideas!
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