Weeks of autumn profit announcements by energy firms have come at the same time as data from the Warm This Winter campaign found that over a third (38%) of people from vulnerable households think they won’t or may not be able to afford to put the heating on at all this winter.
Among the recent announcements were National Grid, which posted profits of hundreds of millions of pounds in their distribution and transmission businesses. SSE also declared £335m profits in similar parts of its company.
A large part of these profits come from the firms’ role as Distribution Network Operators (DNO) for electricity, which customers pay for through Standing Charges. In practice, it means that these firms can vary the cost of bills for people across different regions it provides electricity to.
For example, in the East Midlands, National Grid customers have the cheapest energy in the UK, but households it serves in south west England are paying £75 more every year in standing charges.
Ofgem has now announced an investigation into Standing Charges and a spokesperson for the End Fuel Poverty Coalition commented:
“The announcement of a Standing Charges review is a welcome step forward. Recent Warm This Winter Tariff Watch reports have highlighted how we need much more transparency in how our energy bills are calculated and the factors that go into calculating what is seen as a fair tariff.”
Another firm which benefits from Standing Charges is Scottish Power which is both an energy distributor and a supplier to households. Its Madrid-based parent company Iberdrola posted profits of 3.4bn Euros for the first nine months of 2023.
The supplier, which was previously named and shamed by Ministers as the worst culprit for forcibly installing prepayment meters, was recently granted 124 warrants for forcible PPMs in a move that has sparked concern among campaigners and politicians.
Jonathan Bean from Fuel Poverty Action, said:
“Firms are celebrating bumper profits whilst energy firms continue their plotting to restart the abhorrent process of breaking into homes to install prepayment meters.
“It’s yet another example of firms profiting from misery.”
As research for Warm This Winter found that among those badly affected by the energy bills crisis are pregnant mothers and young families, all aspects of the energy industry have enjoyed a profits bonanza.
BP announced £2.7bn profit and Shell reported over £5bn profits.
Shell was recently offered 10 of the new 27 oil and gas licences in the North Sea by the Government. However, an audit of production data by analysts at Uplift found that across the hundreds of licences offered by UK governments since 2010, just 16 days of new gas has been delivered to the grid – half of which was sent to the Netherlands.
Equally, Norwegian firm Equinor’s profits continued to soar – up to £6.6bn according to the latest results. The company will also enjoy a tax break from the UK Government for its controversial Rosebank field.
Reporters at Bloomberg concluded that this field won’t begin pumping oil and gas until at least 2026, and it isn’t large enough to have an impact on the security of UK energy supply or prices
Fi Waters, spokesperson for the Warm This Winter said:
“These profits are shocking as 38% of vulnerable households say they cannot afford to put the heating on at all this winter. That’s pregnant women, the elderly, families with young kids and people with long term illness.
“The Government must step in and provide a consistent Help to Repay scheme for households in energy debt and an Emergency Energy Tariff guarantee which is available to all vulnerable households, regardless of supplier.”
The Emergency Energy Tariff would use the existing Energy Price Guarantee mechanism to fix the unit costs and standing charges for vulnerable groups at a lower level. Campaigners have suggested that this is fixed at the levels of energy bills in winter 2020/21, which would see eligible households’ monthly energy bills reduced by approximately £87 a month from current levels – a saving of around 46%.
Proposals for such a move are backed by 83% of the public and the initial research to inform the development of the Emergency Energy Tariff and targeting of support was undertaken by the University of Oxford’s Environmental Change Institute and Cambridge Architectural Research.
Dr Tina Fawcett, Associate Professor, University of Oxford:
“Our research has helped identify how to effectively target vital support to households most at risk this winter. To avoid future energy bill crises, locally we need more investment in energy efficiency and energy advice, and nationally we must rapidly reduce our dependence on fossil fuels.”
The public can sign the petition supporting an Emergency Energy Tariff online: https://www.warmthiswinter.org.uk/get-involved/emergency-energy-tariff-petition