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Shareholders Celebrate
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Energy Suppliers Profiting from Crisis
Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk
Energy suppliers increase dividend payouts while millions suffer in fuel poverty.
Calls for the government to intervene have intensified as it is revealed that energy suppliers increased their dividend payouts to shareholders by £257 million last year.
Research commissioned by the Local Government Association (LGA) found that the “Big Six” energy suppliers increased dividends by 19% last year, handing out £1.635 billion in 2007, compared with £ 1.378 billion in 2006.
The changes from 2006 to 2007 were as follows:
- Centrica, owner of British Gas (www.britishgas.co.uk), increased its payout from £409 million to £478 million.
- EDF (www.edfenergy.com) increased its dividend from £105 million to £110 million
- Scottish and Southern Energy increased its payout from £400 million to £474 million
- npower (www.npower.com) increased its dividend from £37 million to £250 million
- E.ON (www.eonenergy.com) paid nothing in 2006 and paid £240 million in 2007
- Scottish Power (www.scottishpower.co.uk) was the only supplier to cut dividends, from £427 million in 2006 to £83 million in 2007
Sir Jeremy Beechman, acting chairman of the LGA, said these figures effectively destroy the previous claims made by energy suppliers, i.e. the claims that their profits must be protected in order to invest in new technologies and improving infrastructure for the future.
“This research torpedoes the energy companies’ justification for their profits” he said.
However, the Energy Retail Association (which represents the major suppliers) claimed that shareholder payouts did not affect investment plans. Its chief executive Garry Felgate said: “This payment to shareholders is not an alternative to the commitment by energy companies to invest tens of billions of pounds in Britain’s energy infrastructure”.
The Government has come under increasing pressure from trade unions and Labour backbenchers to help those struggling with rising fuel bills, but Chancellor Alistair Darling has so far resisted calls for a windfall tax, arguing that it would affect the competitiveness of the industry.
Ministers are continuing to work on a package of measures to aid those in fuel poverty and while they are likely to focus on new energy efficiency measures rather than cash payouts, Downing Street made clear this week that nothing had been ruled out.
Chris Eagle, Commercial Manager at Energy Choices says: “With so many households struggling to cope with the rising cost of energy, it is shocking to see energy suppliers handing out such high profits to the shareholders. With an announcement on the Government’s plan of action due next week, hopefully help for those suffering the worst will soon be at hand.”
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