Utility Company Holding On To My Money

The behaviour of utility companies has been a perennial concern of mine, prompted when the deign to send me a bill: http://rooksmoor.blogspot.com/2007/05/uk-utility-companies-cash-vampires-of.html  The constantly rising prices are well known to everyone in the UK and cause real difficulty for millions of people, even when we are having an incredibly mild winter like we are at present.  It is ironic that global warming may be sparing the lives of thousands of British elderly people.  Utility prices rise whenever there is some crisis that increases the cost of gas and oil and that they do not decrease when these costs fall; our monthly combined gas and electricity is now equal to what our quarterly bill was in 2008.  In addition it is clear that the six power utility companies are running a cartel unchallenged by anyone.  All their prices rise by approximately the same amount at the same time of the year with an increase of around 20% in 2011, well above the increase in pay and even general inflation.

What I am focusing on today is not simply the rising prices, but in particular the way customers are treated.  There now seems to be an accepted way that service providers feel they can treat you.  They are not compelled any longer to even provide a service for what you pay them let alone one which is timely and efficient.  This applies to things like telecommunications and rental property as well as other utilities.  If you are disgruntled with them, you find it difficult to break a contract that they insisted was the only terms you could sign up for and they feel free to levy all kinds of charges to get away from them even if they are failing to provide the service.  I have also noted before how these days you pay in advance for so much and how this actually works against people being efficient in their usage of gas and electricity because with the fixed monthly rate you do not see any gain for yourself especially if on rental contracts of less than two years that are so common:  http://rooksmoor.blogspot.com/2010/06/annual-utility-bills-no-incentive-to-be.html

I live in a house in which we economise as much as we can in terms of utility usage not simply in an (often fruitless) effort to keep bills down but also because we are aware that humans are causing damage to the world through excess usage of finite resources.  We tried to have solar panels installed but out roof proved to be the wrong shape which suggests to me that people should be working on all kinds of shapes of panels if we are really going to make a break through for renewable energy.  The halving of the government incentive to have panels installed is damaging in so many ways, notably in raising unemployment in the private sector which is supposed to be soaking up job losses from the public sector and slowly down an improvement in our 'fuel security'.  Fuel security is something the British government has been obsessing about at least since the 1960s and focuses on how Britain can ensure it has enough fuel to power its industry and domestic sector.  As Britain moved steadily away from the consumption of domestically produced coal from the mid-1960s down to 1985 and the North Sea oil reserves were depleted there was a renewed awareness of a need to secure sources of oil in countries friendly to the UK.  This is nothing new and was on the agenda particularly 1967-73 where turbulence in the Middle East led to the cutting of oil supplies and then a substantial price rise which ended the post-1945 economic boom for good.  Fuel security has been what has motivated US and UK involvement in Iraq, probably in the Libyan revolution too; British involvement in Nigeria and US concerns in Venezuela.  The complicating factor compared to the 1960s that China too is securing fuel resources by heavy investment in any country which will accepts its money. 

Government subsidies to install solar panels right across the country would secure and increase jobs as well as help reduce the UK's fuel insecurity through reducing dependence on fossil fuels from countries which might not like us.  As I have noted before: http://rooksmoor.blogspot.com/2010/01/what-if-uk-had-handled-oil-shock-of.html  Britain gave away its lead in sustainable energy.  However, in Derby recently I saw a line of small scale turbines on the roof of an office building that were providing electricity to the building.  Britain lags behind building wind turbines along motorways the way the Germans do and can be achieved without even having to upset the powerful pretty-England lobbyists.

Anyway, solar power is currently out for our house.  This means we remain dependent on one of the six companies and their authoritarian approach to pricing and charges.  For the last twelve months we have paid £140 (€167; US$217) each month.  Our consumption of gas has risen probably due to the cold period in January compared to 2010 but our consumption of electricity has fallen.  In 2010 we ended the year with £277 in credit, i.e. we had paid them £277 more than was due for the amount of gas and electricity we had used.  I contacted the company, Scottish Power, to ask for a refund but was told that was not possible as our consumption might rise.  So, they were saying that they were holding this money to hedge against us suddenly consuming more.  This makes their statements that readings are important so that we 'only pay for the fuel you use' utterly ridiculous.  Instead we are simply giving them a set amount of money and they take out what they feel they need. 

The invidious nature of this has been revealed this year.  For 2011 we ended the year £582 (€692; US$902) in credit to the company, so they now have an additional £305 of mine for fuel of theirs I have not bought.  On this basis the more fuel I save this year the larger that sum will rise.  I have enough credit with them to pay for all our gas and electricity until mid-April 2012.  However, if I stop paying penalty charges will be levied on me.  You might think that on this basis they might reduce my standard monthly charge, but no, it has been set again at £140 per month.  I guess I should be grateful that the monthly charge has not risen but I am resentful that the company is holding on to my money gaining interest on it in their account when that is money which could feed my household for more than two months.  At the rate we are going within two years I will be paying a whole year in advance for my fuel.  I can see that is in the utility company's interest but it is certainly not what the majority of us would consider good customer service. 

You have to step outside the world of utility companies and their warped mindset to see how greedy and twisted their approach is.  Imagine I went into a supermarket and when I arrived there they took £140 from me.  I then proceed to spend £100 on food.  When I reach the till, rather than be refunded the £40 that I have not spent, the shop holds on telling me that they need it just in case more than two years from now I might suddenly spend some extra on one of my trips.  Surely if I do then they can charge me more.  The amount of cash that utility companies must be holding for resources they have not provided to the customer must be in the millions.  They do not seem to be investing it in improving their provision and they are certainly not reducing prices to customers.  Fuel poverty now affects 5.5 million people in Britain up from 3.8 million at the end of 2010.  Partly this is due to the fact that household incomes fall as all costs rise, pay in many cases is actually falling and unemployment continues to rise.  To me it seems that the only way I can get my money back is to say that I am leaving Scottish Power and moving to another company, presumably, though I have not put this to the test, they would be compelled to pay me back the excess money they have taken from me.  Much of the focus is on the price that we are charged for the utilities we use, but pressure also has to be brought to bear on companies for how they charge us especially for fuel we have yet to use.

P.P. 09/01/2012
Well, I am pleased to say that by threatening Scottish Power with moving my account to another provider they have agreed to refund me £440 in two stages.  I received the £40 last week and should get the £400 by 17th January.  They have also reduced my monthly payments from £140 down to £90, thus by the end of the year I will be £1040 better off.  Now, that is a reward for using less gas and resources and has come at just the perfect time to deal with all the New Year bills.  What is irritating is that it has taken pressure spread over two years plus a threat to move my account to get my money back when, in my view, they should be attentive to these things and do them unprompted.

Utility Companies Lie and Drain Us Dry

I suppose it does not need me to draw attention to this fact, as anyone living in the UK, unless you are a multi-millionaire, will be aware of how expensive gas and electricity is becoming for consumers. This is very much a posting on the basis of anger management to tap off a bit of my fury at the incredible greed of utility companies in the UK.

The bills for the average house (usually reckoned to be a 3-bedroomed house with two adults and two children) has risen from around £900 (€1098; US$1584 using current exchange rates as the pounds has fallen a lot since then) at the start of 2008 to £1200 (€1464; US$2112). As we have a cartel in the UK, all of the suppliers have raised their prices to the same level, though British Gas (despite the name, it used to be a state-run company, it also supplies electricity) with 11 million customers, the biggest company, charging the highest and giving a 35% increase in one go last month. There is no competition in the UK for energy supplies. You can shift from one to the other, but there is in fact very little difference between them. Like other utility companies, they also now lock you into a contract. Despite it being summer and us using less gas and electricity (and us going to great efforts in this house to reduce consumption, our electricity consumption is 1000 KwH (kilowatt hours - literally 1 kilowatt being used for an hour, that is 16 x 60-watt bulbs being left on for 1 hour) per quarter than the previous people who lived in this house) I am still paying exactly the same as I did in January. If I have over-paid, which I am doing each month, I may get it back at the end of the year, by which time the company has been earning interest on it.

No wonder companies from outside the UK are interested in buying into the British market. EDF Energy has appeared as a leading player, EDF actually stands for Electricite de France. This is 85% owned by the French Government; it used to be their largest nationalised industry. The Spanish company, Iberdrola took over Scottish Power in 2006 and of the other 'Big 6' energy suppliers in the UK, only Centrica (which owns British Gas) and Scottish & Southern Energy are in British hands, the remaining two, E.ON and RWE are owned by German companies. This means they have refused to comply with government steps to provide fuel vouchers for poor customers or to pay windfall taxes. The British owned companies have said they will comply, probably because the government can exert more moral pressure on them, but as yet, no provisions for helping those in fuel poverty (spending more than 10% of their income on heating and lighting) have been announced. The jump of a third in bills this year, has shoved many more millions of people into this category and it will not only the elderly but young families and single working people who also will not be able to heat or light their houses. What is the point of trying to get the UK the most internet-connected country in Europe when people cannot afford to pay for the electricity to run their computers? How many more people dead from the cold are going to be found this winter?

Of course the energy companies have said it is because of increased oil and gas prices. These did rise sharply but have fallen back by 25% from their peak, though of course we have seen no impact on domestic energy prices and only a saving of about 10% of petrol prices, less on diesel. The companies whine about their profits being squeezed, but announcements today of dividends paid to shareholders shows the complete opposite has happened, their profits have just kept growing. This comes from the BBC website but I am sure it is all over the internet. Of the Big 6 all have raised dividends. The figures compare 2006 and 2007. Centrica dividend payouts went from £408 million to £478 million (€583 million; US$841 million at current exchange rates); Scottish & Southern from £400 million to £474 million; RWE (which owns NPower) went from £37 million to £250 million, EDF (bearing in mind that only 15% of it is not owned by the French government) went from £105 million to £110 million (€134 million; US$194 million, out of a total profit of €5.61 billion for 2007. The British public are actually subsidising the French Government! In France the government only let it raise prices by 1.5% for French consumers) and E.ON went from £0 dividends in 2006 to £250 million. So where is the poverty among energy companies. Scottish Power which kept its rise in bills back until the last moment this year cut dividends from £427 million to £83 million, but that probably reflects the takeover in 2006 and the need for it to re-invest a great deal at that stage. I predict their dividends will be back up this year.

So, all this stuff about price rises cutting profits is a lie. It does not matter if their margins are squeezed for a few months in 2008, they have made more than enough money in the past 2 years to tide them over for another five years, not just one blip. This is incredibly insulting. We are being compelled not to keep these companies from bankruptcy, but to keep up the earnings of their shareholders. People are going to be suffering ill health and people are going to be dying so that the shareholders and the directors of these companies see no dip in their vast earnings.

If I was Gordon Brown, I would do the following. An immediate windfall tax, taking equivalent to 25% of the dividends paid out to shareholders. I would threaten any company that did not comply with nationalisation, with no compensation. I would compell all companies to slash prices back to the level at the start of 2008, end fixed contracts and move to billing which took account of the income of the consumers. There is no point the Bank of England tweaking the interest rates at all, when basics like heat and light (and of course food as well, but that is for another posting) are rising. You cannot reduce the inflationary pressure just by raising interest rates, when what is boosting prices are things that people pay for out of their basic income, not usually from loans (if they are are at the stage when they have to borrow money just to pay for heating and lighting, they are beyond worrying about interest rates). Of course this will not happen. Yet again, we are shown that actually the government has no power to contest the will of big business. Ironically Sakozy's government in Paris could make a greater impact on energy prices in the UK that Brown's in London can.

How immoral a society have we become when companies are in a position to kill people (and this is what they are doing to elderly people, look at the mortality rates this Christmas) for the sake of not just profit but super-profits. We are nothing more than the scum on the feet of the fat cats of the utility companies. Their cartel was handed a monopoly power because we cannot get energy from other sources. The much vaunted competition that was supposed to keep prices down has proven to be a farce (as anyone could have told you, in a monopoly position, you get cartels and unlike the USA, the UK has no anti-trust (i.e. cartel) legislation to prevent this). Greed, massive greed in the UK is killing ordinary people and yet those who challenge this or call for something else are condemned as the ones who are 'wrong' in trying to restrict 'free' enterprise. This is an immoral country when that is seen as the 'correct' approach. We have no choice but to suffer it and in 2008 you will see many people dying for it. Later this year when you look out on your street and see the coffin of the old woman from the house at the end of the road or the flat downstairs from you, know what killed her: fat men enjoying a hearty lunch in front of a roaring fire in some exclusive restaurant, no-one else.