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Date: Mon 6 October 2008
Ofgem probe confirms UNISON prediction of 'golden hole' in flawed
energy market
Leading Scottish energy union UNISON Scotland responded to the
Ofgem Energy Supply Probe by roundly criticising the failed energy
market for which the regulator is responsible.
UNISON Scottish Organiser Dave Watson called for an end to the
"market madness” overseen by Ofgem which has seen consumers pour
billions into a "golden hole” of energy company profits.
Ofgem's report fails to address the problems faced by consumers,
or to propose any realistic solutions in the face of blatant profiteering
by energy companies. But amongst the discredited and increasingly
desperate Ofgem recommendations that customers try to make ends
meet by switching amongst suppliers, the report reveals the ugly
truth about price discrimination against the poor. The average annual
bill for households on pre-payment meters is £118 higher than those
better off customers who were able to pay by direct debit.
UNISON is calling for immediate windfall taxes on energy profits,
and in the long term, wider intervention in the failed energy market
to ensure that consumers stop funding company profits.
UNISON Scottish Organiser Dave Watson said: "In January of this
year UNISON published a research report highlighting the huge increase
in energy company profits at the expense of household consumers.
We showed that companies made £2.5bn more than the increase in costs
of producing and selling the electricity and gas. That is £100 a
year extra for the average family. We called on Ofgem to take action
to address the obvious failings of the competitive market. And we
predicted that Ofgem would resist such an investigation because
it undermines their ideological commitment to market solutions.
"We also predicted that when the facts and noise became irresistible
they would produce a very long report that would say the market
was working well. Sadly in today's report they have done just that!”
Dave Watson added:
"No serious observer is claiming the companies act as a cartel.
But equally it is clear that the market is not working and the report
fails to address this ‘golden hole' of energy profits. At a time
when consumers are facing even higher energy bills, today's report
simply avoids the big issue. In the short term there needs to be
a windfall tax on these profits to fund some much needed relief
for consumers. In the longer term we need to end this market madness
and ensure that consumers stop funding company profits.”
UNISON Scotland is also concerned at the wider impact of energy
on public services. Increased energy costs are a major factor cited
by the local government employers body CoSLA for their below inflation
pay offer to council workers.
ENDS
For Further Information Please Contact: Dave Watson (Scottish
Organiser)- 07958 122 409 (m) Chris Bartter (Communications Officer)
- 07715 583 729 (m)
NOTES TO EDITORS
UNISON Scotland: UNISON is one of Scotland's largest trade
unions representing over 160,000 members,and is the biggest union
in the Scottish power industry. Our members in other sectors including
local government also have an interest in energy, particularly fuel
poverty.
Fuel Poverty: The Scottish Government Review of Fuel Poverty
in May 2008 showed that 543,000 households (comprising over a million
people) were in fuel poverty - which means they have to spend more
than 10% of household income on energy bills. And the sharp rises
in fuel costs are making the situation worse: the Scottish House
Condition Survey in March 2008 estimated that for every 1% rise
in average annual fuel price, around 8,000 more households go into
fuel poverty. See also http://www.unison-scotland.org.uk/response/povertyresponse.html
UNISON report on ‘Golden Hole': Report Exposes Golden
Hole in Energy Firms' Accounts - Inquiry Demanded into Missing billions
UNISON Press Release 22/01/2008 on the publication of ‘Gas and electricity
costs to householders', produced by Cornwall Energy Associates and
commissioned by UNISON and the National Right to Fuel Campaign,
January 2008 http://www.unison.org.uk/asppresspack/pressrelease_view.asp?id=1087
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