Energy company executives are lying about their costs and ever increasing profits - here's the proof - time to nationalise the energy industry

The energy companies claim their profits are not increasing. Yet Scottish Power’s own 2012 accounts show it more than doubled its net profits from £267 million in 2011 to £648 million in 2012 (1)

The energy companies claim the vast majority of any profits they do make are re-invested in new generation capacity. Yet in February Scottish Power’s parent company Iberdrola announced it was spending £890 million from Scottish power revenues on share dividends (2) – (4).

It also spent £23,000 sponsoring Labour, Conservative, SNP and Plaid Cymru conferences and events in 2012 (5). An investment to ensure no real regulation or renationalisation maybe? If so, cheap even if it had been ten times that.

Accountants who looked at the Big Six energy firms’ accounts, interviewed by Channel 4’s Dispatches, found they all issue similar share dividends of hundreds of millions of pounds a year (6).

The accountants also found the firms’ claims on their profit margins include only retail, excluding big profit margins on generation and wholesale of energy, with all six firms being generators as well as retailers (7).  

Office of National Statistics and Ofgem figures show that while wholesale energy costs increased by 38% between 2005 and 2010, customers bills increased by 73%, almost twice as much. Add in that the companies were making profits on generation and wholesale and energy costs can’t possibly account for the increase in bills (8).

A study by Manchester University in 2011 found the big six energy firms systematically profiteering over years by raising their prices by the full amount every time wholesale gas costs increased, but, when costs fell, delaying passing on the savings to customers and only passing on part of them when they did (9).

Ofgem, the energy regulator, recently estimated that energy companies have been increasing prices by up to 10% a year while wholesale gas costs are falling (10).

It also estimates that their profit margins have doubled in the last year , while infrastructure costs, wholesale energy costs and green levies have added just £35 to the average bill in the same period (11) – (12).

It's not the green levies -
they're under 4% of the average household’s bill

The energy companies, PM David Cameron and the Daily Mail want you to believe that the main cause of rising bills has been “immoral” green levies added to them by the last government (13) – (15).

Yet most of these levies have nothing to do with renewable energy or reducing CO2 emissions. They’re to reduce energy bills for the poorest households.

Only four are ‘green’ measures – the Renewables Obligation, the EU Emissions Trading Scheme and the Carbon Price Floor, and Feed In Tariffs, which allow consumers to save on their bills by generating electricity using small wind turbines or rooftop solar panels. The four together put £50 or about 3.95% on the average household’s annual bill of £1,267 a year (16) – (17).

So green measures are under 4% of the average bill ; apart from the fact that as global demand for fossil fuels is rising faster than supply, if we don’t invest in alternatives to increase supply, energy prices will rise faster.

The other two main government levies on fuel bills, the Energy Companies Obligation and the Warm Home Discount, reduce bills for people on low incomes. The final two, and smallest, are for Smart Meters and Better Billing to reduce all consumers’ energy bills. These four non-green levies add £61 a year to the average bill or 4.81% (18) – (19).

Privatisation is only a success for the 1%
at everyone else’s expense :
time for renationalisation

Privatisation of the energy industry is only a success for the wealthy executives and major shareholders of the companies, at everyone else’s expense.

The average income of the majority of people in the UK relative to inflation has been falling ever since the financial crisis ; by 2% in this year to August alone (20).  

Almost one in four people in the UK are spending their savings to pay energy bills, one in six have gone into debt to pay them. Thousands are estimated to die each winter due to illnesses caused by cold due to being unable to afford to heat their homes (21) – (22).

Yet the energy companies’ executives are still increasing their profits and spending them on dividends. That kind of massive redistribution of wealth from the vast majority to a tiny and already wealthy minority is unacceptable. Nationalisation must follow.

Even with the economy growing again, so much existing and new wealth is being taken from the majority by a small majority that economic growth is not stopping the majority continuing to get worse off. Unless we want to end up like Brazil, with a tiny wealthy elite and everyone else in poverty, we have to reverse the inequality.

What you can do

• Sign this 38 degrees petition and/or this petition on the government’s website calling for the renationalisation of the energy industry to end profiteering by the energy companies.

 

• Contact your MP asking him to urge his / her party to adopt renationalisation of the energy industry and call for it in parliament and in his or her column in the local newspaper. You can find who your MP is using your post code and contact them on this site.

 

• Email letters or text messages to newspapers, magazines and radio and TV programmes when they’re discussing energy prices to call for renationalisation

 

Sources

 

(1) = SCOTTISH POWER UK PLC DIRECTORS’ REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012, page 3,
http://www.scottishpowerrenewables.com/userfiles/file/Consolidated_Report_%26_Accounts_Scottish_Power_UK_plc_2012.pdf

(2) = BBC News 11 Jul 2013 ‘Profits soar at Glasgow-based Scottish Power’,
http://www.bbc.co.uk/news/uk-scotland-scotland-business-23270146

(3) = Financial Times / ft.com 17 Feb 2013 ‘Iberdrola defends £890m UK unit dividend’,
http://www.ft.com/cms/s/0/b020833a-78fb-11e2-b4df-00144feabdc0.html#axzz2jiPiV4Q5

(4) = thisismoney.co.uk 17 Feb 2013 ‘Spanish owner takes £900m dividend from Scottish Power despite pushing through a big increase in bills for British customers’,
http://www.thisismoney.co.uk/money/markets/article-2280170/Scottish-Power-defends-900m-Iberdrola-dividend.html

(5) = SCOTTISH POWER UK PLC DIRECTORS’ REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012, page 14,
http://www.scottishpowerrenewables.com/userfiles/file/Consolidated_Report_%26_Accounts_Scottish_Power_UK_plc_2012.pdf

(6) = Channel4.com 04 Nov 2013 ‘Dispatches delves into the accounts of the Big Six energy suppliers’, http://www.channel4.com/info/press/news/dispatches-delves-into-the-accounts-of-big-six-energy-suppliers

(7) = See (6) above

(8) = BBC News 11 Jan 2012 ‘Energy bills explained’,
http://www.bbc.co.uk/news/business-15352599

(9) = Guardian 02 Dec 2011 ‘Big six energy firms face fresh accusations of profiteering’,
http://www.theguardian.com/business/2011/dec/02/energy-firms-accusations-profiteering-electricity

(10) = Guardian 29 Oct 2013 ‘Energy firms raised prices despite drop in wholesale costs’,
http://www.theguardian.com/business/2013/oct/29/energy-firms-raised-prices-as-wholesale-costs-fall

(11) = Independent 29 Oct 2013 ‘Big Six energy producers under fire over excessive profits ahead of grilling by MPs’,
http://www.independent.co.uk/news/business/news/big-six-energy-producers-under-fire-over-excessive-profits-ahead-of-grilling-by-mps-8909608.html

(12) = Guardian 29 Oct 2013 ‘Energy firms 'overcharge by £3.7bn a year'’, http://www.theguardian.com/business/2013/oct/29/energy-firms-overcharge-accusation

(13) = Telegraph 29 Oct 2013 ‘Scrap green tax and energy bills will fall, say Big Six’, http://www.telegraph.co.uk/finance/newsbysector/energy/10413396/Scrap-green-tax-and-energy-bills-will-fall-say-Big-Six.html

(14) = theguardian.com 23 Oct 2013 ‘David Cameron pledges to reverse 'green charges' on energy bills’,
http://www.theguardian.com/business/2013/oct/23/energy-industry-competition-test-cameron

(15) = Daily Mail 13 Oct 20134 ‘Red Ed's great green obsession... and the real reason YOUR bill has gone through the roof’, http://www.dailymail.co.uk/news/article-2456760/Red-Eds-great-green-obsession--real-reason-YOUR-gone-roof-The-hidden-subsidies-household-pays-year-thanks-Milibands-laws.html

(16) = theguardian.com 23 Oct 2013 ‘Green energy levies: how much do they cost and will they be cut?’, http://www.theguardian.com/money/2013/oct/23/green-energy-levies-how-much

(17) = Full Fact 23 Oct 2013 ‘How much do 'green taxes' add to energy bills?’,
http://fullfact.org/factchecks/energy_bills_green_taxes-29250

(18) = see (10) above

(19) = See (11) above

(20) = guardian 16 Oct 2013 ‘UK unemployment data: 0.7% average pay rise dwarfed by inflation’,
http://www.theguardian.com/business/2013/oct/16/uk-unemployment-average-pay-rise-inflation

(21) = see (6) above

(22) = BBC News 19 Oct 2011 ‘Rising energy bills causing fuel poverty deaths’,
http://www.bbc.co.uk/news/business-15359312

Incinerators recycle nothing, cause cancers and birth defects, lose more energy than they produce and waste valuable resources

The Scotgen company claim their planned incinerator at Dovesdale farm in South Lanarkshire will create “green energy” by “recycling” waste (1) – (2). This is part of a UK and worldwide attempt at rebranding incinerators. In fact incinerators recycle nothing, produce less energy than will be required to replace the products they incinerate instead of recycling – and emit many toxins which cause cancers (especially in children) and birth defects in babies.

They incinerate plastics in household waste. Plastics are petroleum products – i.e made from oil  - a finite resource which while run out (and become hugely expensive long before then). So it’s madness to burn them rather than recycle what we won’t be able to replace in the long run. Any energy generated is much less than that required to produce new plastic containers to replace those incinerated – a net energy loss  (3) – (4).

Incinerating plastics also releases carcinogenic toxins such as dioxins, heavy metal particulates and nitrogen oxide for at least 14 miles on the wind. These can be inhaled, causing cancers , especially in children - and birth defects in babies; and can contaminate farmland and water, going into the food chain. Scotgen also incinerate industrial toxic waste, which is even more hazardous. While some of the emissions are caught by filters in incinerator chimney stacks or flues, significant amounts are not – and these are the biggest hazard (5) – (12).

One of many babies born with birth defects in Fallujah, Iraq, thought to be linked to depleted uranium shells, white phosphorus and other chemical weapons employed by Coalition Forces there in the assaults on the city in 2004. Toxins emitted by incinerators can cause similar deformities in babies

Scotgen made the same claims it’s making for Dovesdale for their existing plant at Dumfries which has never generated a single watt of electricity over a year after it opened;  and exceeded it’s emissions limits (including on dioxins and nitrogen oxide) at least 52 times in it’s first 7 months (13) – (15).

The ‘waste to energy’ claims are just a rebranding of incinerators to make them sound green. In fact they are a dangerous, expensive, short-sighted, quick fix for the landfill problem; which may lead to many deaths. Any short term savings compared to recycling are massively offset by the long term costs in overall energy loss to the country, destruction of plastics which won’t be able to be replaced when oil runs out – and will become increasingly expensive long before it runs out entirely – and in illnesses and deaths caused.

Experts on incineration and waste management like Dr Dick Van Steenis, Dr. Paul Connett, Greenpeace and the US Environmental Protection Agency say superior alternatives exist – recycling, legal limits on the amount and type of materials used in making products and packaging; and making producers of products pay for recycling them and their packaging; plus anaerobic digestion of organic waste (16) – (23).

Dr. Dick Van Steenis - an expert on air pollution's effects on health, one of many to condemn incinerators as unsafe and unnecessary

Recycling would also reduce CO2 emissions massively compared to incineration, reducing the climate change problem posed by incinerators (24) – (25). Existing incinerator projects also show taxpayers’ money spent on incinerators is taken out of councils’ recycling budget.

Any politician or company telling you incineration is a better solution for the landfill (or waste managagement) problem than recycling is selling you a short-term quick fix, on the calculation that they’ll have retired by the time all the longer term costs have to be paid; and that they can attribute cancers, birth defects and other illnesses to other or unknown causes.

South Lanarkshire Council’s planning committee ignored around 20,000 objections against Scotgen’s planned Dovesdale Incinerator to approve it by 14 votes to 9. Every Labour councillor on the committee voted for the incinerator. Every SNP councillor on it voted against. (See below for list of councillors voting for and against, their party affiliations and links to contact details for them).

SEPA (the Scottish Environmental Protection Agency) still has to grant Scotgen a licence to run the plant before Scotgen can begin operations. If you want to find out more about the Incinerator and the campaign against it see the Action Group against Dovesdale Incinerator’s website here. There’s a facebook group against the incinerator here

Councillors voting for the incinerator

Jackie Burns (Labour);Pam Clearie (Labour); James Docherty (Labour) ; Edward Mcavoy (Labour) ;Alex Mcinnes (Labour)  Dennis Mckenna (Labour) ;  Mary Mcneil (Labour) ; Graham Scott (Labour) ; Hamish Stewart (Conservative) ; Chris Thompson (Labour) ; Jim Handibode (Labour) ; Hugh Dunsmuir (Labour) ;  Eileen Baxendale (Liberal Democrat) ;  Alex Allison (Conservative)

Councillors voting against the incinerator

Archie Buchanan (SNP) against. Tommy Gilligan (Independent – no party) against.   Ian Gray (SNP) against. Bill Holman (SNP) against. Jim Wardhaugh (SNP) ; Archie Manson (SNP) ; Claire Mcoll (SNP) ; Lesley Mcdonald (SNP)

Councillors on the planning committee but not present on the day of the vote

Patrick Ross-Taylor (Conservative)   Gerry Convery (Labour)

Source notes

 (1) = Carluke Gazette 10 Feb 2011 ‘No peace at Dovesdale’

(2) = Hamilton Advertiser 29 Jul 2010 ‘Scotgen state case for ‘green energy’ waste plant at Dovesdale Farm’,http://www.hamiltonadvertiser.co.uk/news/local-news/lanark-and-carluke-news/2010/07/29/scotgen-state-case-for-green-energy-waste-plant-at-dovesdale-farm-51525-26948218/

(3) = Friends of the Earth September 2007 ‘ Up in Smoke – Why FoE opposes Incineration’,http://www.foe.co.uk/resource/media_briefing/up_in_smoke.pdf (see pages 6 - 7 under sub-heading ‘Recycling saves energy’)

(4) = Friends of the Earth October 2009 ‘Gone to waste – the valuable resources that European Countries bury and burn’, http://www.foe.co.uk/resource/reports/gone_to_waste.pdf

(5) = Parliamentary Office of Science and Technology Post Note 149 December 2000 ‘Incineration of Household Waste’, http://www.parliament.uk/documents/post/pn149.pdf (see especially ‘Pollutants from incineration’ pages 1 – 2 )

(6) =  Allsop et al (2001) ‘Incineration and Human Health’, Greenpeace Research Laboratories & University of Essex, 2001, http://www.cank.org.uk/GreenpeaceHealthReport401.pdf

(7) = Greenpeace background on incineration 30 Nov 2004, http://www.greenpeace.org/international/en/campaigns/toxics/incineration/the-problem/

(8) = Michela et al (2004) ‘Health effects of exposure to-waste incinerator emissions: a review of epidemiological studies’, http://cat.inist.fr/?aModele=afficheN&cpsidt=16117736

(9) = British Medical Journal 22 Jun 2009 ‘Long term exposure to air pollution decreases life expectancy, UK report finds’, http://www.bmj.com/cgi/content/extract/338/jun22_2/b2532

(10) = World Health Organisation 2006 ‘Principles for evaluating health risks in children associated with exposure to chemicals’ http://whqlibdoc.who.int/publications/2006/924157237X_eng.pdf (says in summary (pages 1 -4)  that children are at increased risk from chemicals produced by “unsafe waste disposal”(page 3) at certain stages in their development – and on page 18 that it has been shown that “air pollutants”, “heavy metals” and “POPs” (persistant organic pollutants – which include dioxins) have been shown to lead to an increased incidence of diseases in children.)

(11) = Health Protection Scotland (2009) ‘Incineration of Waste and Reported Human Health Effects’,http://www.documents.hps.scot.nhs.uk/environmental/incineration-and-health/incineration-of-waste-and-reported-human-health-effects.pdf

(12) = Evening Times 28 Jul 2010 ‘Waste incinerator company in emission safety breaches’,http://www.eveningtimes.co.uk/news/waste-incinerator-company-in-emission-safety-breaches-1.1044212 ; ‘The firm wants to spend £50 million on an incinerator that would burn household and industrial waste …It would also handle “hazardous” materials’

(13) = http://www.scotgenltd.co.uk/

(14) =  Hamilton Advertiser 14 Oct 2010 ‘Scotgen facility at Dumfries still to produce electricity – more than a year after opening’ http://www.hamiltonadvertiser.co.uk/news/local-news/hamilton-news/2010/10/14/scotgen-facility-at-dumfries-still-to-produce-electricity-more-than-a-year-after-opening-51525-27465423/

(15) = Evening Times 28 Jul 2010 ‘Waste incinerator company in emission safety breaches’,http://www.eveningtimes.co.uk/news/waste-incinerator-company-in-emission-safety-breaches-1.1044212 ; article says emission breaches included above acceptable levels of nitrogen oxide

(16) = ‘Zero Waste : A Key Move towards an industrial society’ by Paul Connett PhD,http://www.americanhealthstudies.org/zerowaste.pdf

(17) = Yorkshire Post 13 Oct 2010 ‘Incinerator rapped as 19th century’,http://www.yorkshirepost.co.uk/news/around-yorkshire/local-stories/incinerator_rapped_as_19th_century_1_2596265

(18) = This is Gloucestershire 19 May 2010 ‘Professor Paul Connett wades into the Gloucestershire incinerator debate’, http://www.thisisgloucestershire.co.uk/news/Big-Issue-Professor-Paul-Connett-incineration/article-2173050-detail/article.html

(19) = Greenpeace (2001) ‘How to comply with the landfill directive without incineration’,http://www.greenpeace.org.uk/files/pdfs/migrated/MultimediaFiles/Live/FullReport/4478.pdf

(20) = Greenpeace ‘Getting to Zero Waste’, http://www.greenpeace.org.uk/files/pdfs/migrated/MultimediaFiles/Live/FullReport/4383.pdf

(21) = US Environmental Protection Agency 2009 ‘Opportunities to reduce greenhouse gas emissions through materials and land management practices’, http://www.epa.gov/oswer/docs/ghg_land_and_materials_management.pdf

(22) = Global Alliance for Incinerator Alternatives ‘Solutions’, http://www.no-burn.org/article.php?list=type&type=68

(23) = ' Incinerator Deaths ' by Dr. Dick Van Steenis, http://www.countrydoctor.co.uk/precis/precis%20-%20Incinerator%20deaths%20and%20morbidity.htm

(24) = See (3) above

(25) = See (4) above