BRITISH GAS FURIOUS OVER PUBLIC CONDEMNATION OF ENERGY PRICE HIKES – Rick Haythornthwaite, Chairman of Centrica and owner of British Gas is not happy, no not happy at all.
Mr. Haythornthwaite gave a statement to the press in which he was openly critical of the backlash British Gas has been the recipient of over its recent spates of energy price hikes.
According to Mr. Haythornthwaite if the criticism continues it’s likely that the nation will see the lights go out.
Did Mr. Haythornthwaite just threaten the nation? Did Mr. Haythornthwaite just declare he would cut the power supply if the Government and the public didn’t stop complaining about the continuous rise in energy prices?
There are two aspects that need looking at before making such a judgement. The first and foremost is the obvious in that Mr. Haythornthwaite simply made a direct threat… shut up or I’ll throw the switch and then you’ll have something to complain about.
The second issue is a little more complex…
British Gas recently announced a profit of £2.7 billion; such a figure will likely bring water to your eyes for it will appear excessive and outrageous considering this was produced on the back of a 9.2% increase in household energy bills.
Looking at the situation a little closer we can see that the profit actually dropped by 2% on the previous years despite the price hike.
It gets worse; for with consumer groups and MPs banging on about the cost of energy including the illustrious Ed Miliband, who as former Energy Secretary under Gordon Brown’s Labour Government took no action to curb the energy companies’ prices, this has resulted in a customer exodus of some 460,000 switching to other energy companies.
With this information in mind Mr. Haythornthwaite could have been well pointing to the fact that the continuous bleeding of customers and profits would put British Gas at risk in two areas; one being it won’t be able to generate sufficient profits to invest in new energy production and secondly could in fact push the company into insolvency.
Each of the two instances would therefore produce the accurate statement from Mr. Haythornthwaite that the lights will go out.
Mr. Haythornthwaite did point out that unless the hostilities ceased then Britain faced the very real prospect of prolonged blackouts within two years – this statement for me strongly suggests that an idle playground threat wasn’t made by someone simply wanting to vent their frustration but rather the realisation that without profits to reinvest, the company wouldn’t be able to supply energy.
I am not attempting to defend British Gas or any of the other energy companies for it unquestionable that the profits are vast and that the consumer is continuously asked to pay more; however it must be acknowledged that the cost of building power stations, researching new and more efficient energy sources is inordinately expensive and unless both can be achieved then Britain does run the very real risk of experiencing widespread blackouts.
From the news reports I’ve read it appears that the national press are simply attempting to vilify British Gas by focusing on what many have seen as a petulant threat where in fact it is nothing of the sort.
Certainly consumers are struggling to meet the cost of their energy bills and the price hikes come at a time where the average household is squeezed through on-going austerity measures.
According to the Government the economy has grown by 1.9% this fiscal year but economic experts warn that this growth is being fuelled by personal debt.
Economic experts warn that the growth of an economy cannot be sustained on personal debt and more families are now using their credit cards in order to cover the cost of their mortgages as well as covering the household bills; including energy costs.
If British Gas continues to lose customers at the current rate then it would put the company in a very difficult position regarding the continuation of operations and investment, therefore putting energy supply at risk.
This might not be much of a concern to most consumers but one less energy company means one less competitor leaving the few to almost dictate energy prices; yes there is the consensus that the current suppliers in the market collude in order to set price hikes and this assumption may not be unreasonable considering that once one company puts up their prices the other’s quickly follow suit and all within a similar margin.
Going back to Ed Miliband and he’s promised a 20 month price freeze on energy prices if Labour is re-elected in the 2015 General Election. There are multiple questions regarding his previous statements of implementing such an act and none more so than the questions as to why he did nothing during his tenure as Energy Secretary.
As with most politicians Ed Miliband has enough hot air and rhetoric that could probably generate sufficient energy itself to turn a turbine but his lack of vision or rather his willingness to waft across the Commons with the breeze of public sentiment isn’t conducive of a sustained energy source for Britain.
Yes people are rather angry and as this and successive Government’s have squeezed household finance through ever direct and indirect taxation a price hike in energy cost simply makes life much more difficult; but that still doesn’t detract from the fact that British Gas and all the other energy companies require vast sums for research and development purposes in order to meet Government investment requirements and ensure the energy we rely on remains available.
The continuous criticism of the prices and profits that British Gas makes is, according to Mr. Haythornthwaite, stopping the company from commissioning new power stations which the country ultimately relies on for power.
If you must berate an entity for the cost of energy then focus your attention on the Government for it is they who allowed the EU to impose all manner of restrictions which ultimately makes the construction of power stations and the production of energy inordinately expensive.
Yes the Government does appear to have taken the side of the public in condemning the likes of British Gas but we wouldn’t be in this position if the Government had the spine to prevent the incessant interference from Brussels.