By Andrew Barber, Brighton and Hove Socialist Party
Fuel poverty is defined as having to spend at least 10% of disposable income on domestic heating. In 2009 a fifth of all households suffered this according to official government figures. Austerity measures such as benefit cuts and pay freezes mean the situation has become worse. Stretched budgets inevitably mean stark choices between keeping warm, a healthy nutritious diet, and other basic necessities such as medication. Vulnerability to hyperthermia was illustrated by the 36,700, “excess winter deaths” recorded in England and Wales in 2008/9.
How has this arisen? The companies act as a cartel, keeping prices artificially high to sustain their obscene profits. When one company raises its prices the others follow suit. There is no advantage in switching supplier. According to the Department Of Energy And Climate Change (D.E.C.C.), domestic electricity prices increased by 75% between 2004 and 2009 while gas prices increased by over 122% during the same period. December 2010 saw British Gas increase its gas price by 6.9% and electricity price by 6.7% as the country shivered its way through the coldest winter for 100 years.
International wholesale prices are usually cited to justify the hikes. However, most power is sold directly to consumers, with little of it going to wholesale. The principle reason for the price rises is speculation. Also, these companies own substantial stakes in gas production fields. Centrica approved the mothballing of one of the U.K.’s largest offshore gas fields rather than pay tax. British Gas operational profits for 2010 rose 24% to £472million while those of parent company Centrica rose 29% to £2.4 billion.
Utility privatisation was promoted in the 1980’s on the basis that anyone could become a small shareholder. However, over time ownership becomes concentrated in the hands of a few, implying a lack of broad accountability and proving that privatisation doesn’t spread wealth.
Ofgem, the fuel regulator, highlight an increase in energy firms’ profit margin to £125 per customer in October 2011 compared to £15 in June 2011. However, its powers are weak and proposals to reform wholesale markets via greater competition, and also to simplify tariffs so they are comprehensible to consumers, based on a standard charge plus a unit charge for energy used, are marginal.
All Chris Huhne, the Energy Secretary can suggest, despite having pledged to , “get tough” with the firms is for consumers to ensure they are on the cheapest tariff , switching to direct debit, and to insulate. The cheapest dual-fuel deals, those online, are now in excess of £1000. The comments of Huhne clearly expose the issue of privatisation and Government reluctance, whether ConDem coalition or the previous New Labour administration, to address this.
Domestic energy is a fundamental issue, provision of which impacts on everyone. Yet it exemplifies everything that is wrong with the short- term capitalist system.
Marketing costs, in built obsolescence, corner cutting, and disasters are avoidable. There have been two spills within the space of a week in August from the Gannet Oil Platform off Aberdeen, 1300 barrels i.e. 216 tonnes, released from the first incident alone. The call for renationalisation on a sustainable basis, embracing renewables, could not be clearer.
- Public ownership of the energy generating industries
- Renationalise all privatised utilities with compensation only paid on the basis of proven need
- No to nuclear power which, as well as dangerous, is expensive to decommission
- Major research and investment in to replacing fossil fuels with renewable energy, ending premature obsolescence and un-recycled waste
- Accountable, democratic committees, including workers and users, to run services
- No to privatisation and P.F.I.’s (Private Finance Initiatives)
- A socialist democratic plan of production and distribution