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24 May 2006
Anger at 47% profit rise
Fuel poverty campaigners are furious following Scottish Power’s announcement of a 47% increase in profits, write Stefan Morkis and Graeme Strachan.
The company’s profits rose to £675 million on the back of two price rises since October — and now it has warned that more are to follow.

It said further price rises were “unavoidable” because of wholesale costs.

Organisations working to combat fuel poverty accused energy companies of putting profits before people.

They said each five per cent rise in energy costs plunged another 30,000 Scots into fuel poverty.

Scottish Power, which has more than five million customers, increased its prices in October and again in March, when electricity bills rose by eight per cent and gas by 15%.

Jean Morrison, chief executive officer of SCARF (Save Cash and Reduce Fuel), said today she knew of people in Dundee who often spent days in darkness because they could not afford to buy more electricity cards for their meters.

“For every 5% increase there are 30,000 more people across Scotland who fall into fuel poverty,” she said.

“The big problem organisations like SCARF have is that we are working hard to eradicate fuel poverty, but it seems that every time we make some progress there is another price hike. It is like we are taking two steps forward then one step back.

“The rises make people just want to switch off. A lot of people have card meters — the companies install them to help people budget, but people often self-disconnect and go for a couple of days without light or heat.

“They then have to buy food from the chip shop, which isn’t healthy. Kids are getting healthy eating programmes at school but going to homes where there is not enough money to heat or eat properly. It is the people at the bottom who suffer.”

Ms Morrison said all energy companies were guilty of over-charging.

“I don’t know where it is going to end,” she said.

“We see the massive profits of all firms and wonder why they need to keep raising their prices.”

A leading campaigner for the elderly in Dundee accused Scottish Power of putting profit before people.

Ian Borthwick, advocacy officer for Age Concern Scotland, said the company’s sensitivity to its social responsibility was “somewhat blunted”.

Age Concern’s Dundee HQ has been getting more and more enquiries from older people having problems paying fuel bills.

Mr Borthwick said he dreaded what would happen when further increases kicked in.

“We are chasing our tails here, because one company might be marginally better, but the next month it’s way ahead again, so it’s extremely difficult to give people advice that is going to be of real benefit,” he said.

“We’re at a loss. People are just getting absolutely crippled with this, and it’s anticipated that prices are going to soar again in the winter. I find this very alarming, making it very difficult to give the best advice to older people.

“There are some slightly better deals, but all of those deals have to be done on the Internet and how many older people can do that?

“When you consider the massive profits these companies are making, it seems to me that their sensitivity to their social responsibility is somewhat blunted.

“Fuel poverty is a very real problem in Tayside. I dread what’s going to happen in the winter when people are faced with further increases.”

Mr Borthwick said families trying to put food on the table, pay their bills and keep their homes warm must be asking, “Where is the justice?”

Scottish Power denied today that its increased profits were a result of consumer price rises.

It pointed out that while wholesale gas prices had risen 70% in the year to April, its consumer price rises had been limited to between 30% and 35%.

“It is important to remember that profits are essential for Scottish Power to continue to invest in our electricity systems — last year we invested £1 billion, considerably more than our operating profit of £805 million,” a spokesman said.

Phillip Bowman, chief executive of Scottish Power, said his company had achieved “an excellent set of results”.