Energy firms respond

Citizens Advice Scotland (CAS) is taking on the work of energy watchdog Consumer Futures in April. CAS chief executive Margaret Lynch tells Peter Swindon why she’ll fight to get customers a fair deal

Britains largest energy companies — the big six — face up to criticism in the final instalment of The Courier’s Frozen Out investigation.

THE CHIEF executive of Citizens Advice Scotland (CAS) has described energy price rises as “profoundly shocking”.

Margaret Lynch oversees the national umbrella body that provides essential services to independent Scottish Citizens Advice Bureaux (CAB) in 250 locations throughout Scotland.

She has revealed toThe Courier that CAB was approached around 1,200 times last year by people with problems relating to energy bills.

Client profile information shows the majority of the issues were reported by young mums, people unable to work due to illness or disability, and the elderly.

The greatest problem cited was ‘difficulty making payments’.

Meanwhile, most recent figures from the Scottish House Condition Survey show in 2012, 27% of Scottish households were in fuel poverty — when energy costs are more than 10% of income.

Mr Lynch said: “Price rises are unacceptable and profoundly shocking. There’s no energy company that’s presented a credible defence of these increases.

“You’ve got hundreds of households in Scotland in fuel poverty and some of them will self-disconnect. That’s a real worry for me because that means we’ve got children and older people in cold houses.

“We have hundreds of people who come in to Citizens Advice with problems paying their fuel bills. It can be the straw that breaks the camel’s back.

“There’s a real broad and general concern now about people’s ability to afford rising energy bills.”

Mrs Lynch urged the big six energy companies to reveal their pricing processes and called for more transparency in the way profits are reported.

She said: “There is a suspicion that the big six are operating together, in terms of pricing. What have they done to dispel that? I don’t know how they set their prices. I’m not in the room when these things are discussed. But there is an issue there.

“We also don’t know how much money they are making.

“They pretend that it’s lots of different businesses but it’s actually one business and its people selling to themselves so that there is internal price structuring that makes it look as if, by the end point, that less money is being made in profit than in actual fact is being made by the company two stages further back down the line.

“Companies should be made to be transparent about what their business relationships are with their supplier.

“Is the supplier effectively the same company? Is it a parent, a subsidiary? Who’s making money from this and at what point in the pipeline is the money being made? Let’s get a full disclosure in all of it.”

The CAS chief executive also brushed aside political manoeuvres by the Coalition Government to cut energy bills by £50 a year by reducing green levies and a pledge by the opposition leader Ed Miliband to freeze fuel bills while the market is reformed.

She said: “Clearly there is insufficient pressure being placed by all parties on energy companies, otherwise something would have happened by now.”

Mrs Lynch warned the big six that the public will switch to other suppliers unless they do more for consumers.

She said: “The big six have been on the receiving end of a lot of criticism recently and I don’t think they’ve responded to that nearly half as positively as we had hoped they would.

“They’ve got a strategic opportunity here to show their customers that they want to deliver value. “People are already very angry and at some point they’ll go too far and people will then start to look at more creative and more innovative solutions.

“That’s something I’d like to see.”

Margaret Lynch.