Why Britain’s big energy companies are celebrating Christmas early – and what we can do about it.

As the UK's big energy companies celebrate record profits, an energy co-operative in New Zealand is showing what happens when we make customers the shareholders.


It’s been called Britain’s ‘wasted decade’; 10 years of austerity which have seen flat-lining growth and productivity, public sector pay frozen, and living standards stagnant. In real terms, average wages are actually lower than they were in 2007.

And if that’s tough to stomach, add in uncertainty around Brexit, and rising prices which have prompted the first interest rate increase in a decade. Under our present course, it seems unlikely that wages will be catching up with living costs anytime soon.

Plenty to be concerned about. Unless, it would seem, you own one of the UK’s ‘Big Six’ energy companies.

Together their shareholders trousered more than a £1bn profit this year.

How did they do it? For starters, the average household energy bill has increased by 5.3%. If you’re unlucky enough to be a British Gas customer, that figure is 12.5% (considered switching?). Energy companies have blamed previous price hikes on rising wholesale costs (that’s the cost of raw materials used to generate energy such as gas, oil and coal), and environmental and social obligations placed on them by the Government.

But this year, wholesale costs fell, and for a while now, the Conservative government has actually been reducing much of the regulation energy companies complained about. Rising prices with falling costs and reduced regulation add up to the largest profit margins ever for the energy companies – 4.48%. In 2009, that figure was 0.89%.

Christmas has indeed come early for some – but not 2.5 million households in fuel poverty.

Another way is possible. Over the past decade, the co-operative movement has championed community energy schemes that put customers first, and put cash back into the pockets of customers, not shareholders. Community energy’s time has come, and is supported by more than two-thirds of UK adults, according to some studies.

For over 90 years, EA Networks, based in Ashburton New Zealand, has kept energy prices low while reinvesting millions back into the local community. As a co-operative, EA is owned not by distant shareholders but by tens of thousands of customers. EA Networks issues over 30 million shares to the local district council and consumers. In a welcome change to typical corporate hierarchies, EA customers play a vital role in the company’s structure by electing shareholder committee members who can influence decisions and appoint Directors.

Instead of facing inflated energy bills, EA customers receive discounts based on energy charges paid to the company.

Last year, the co-operative gave $4 million back to customers in the form of account credits.

General Manager Gordon Guthrie proudly stated, “This $4 million goes straight back into the local economy, which is what we are all about.” The co-operative’s dedication to its customers doesn’t stop there – for the past three years, the company has opted to freeze charges, providing much needed financial relief to hard pressed families.

The tide is turning in the UK now too. In spite of the Government’s attempts to undermine the burgeoning community energy sector by reducing tax and financial support,  social enterprise Energy4All has still managed to raise over £5.5 million in investments for small renewable energy schemes, showing the appetite remains among UK consumers’ to play an active role in a more democratic system.