[UK] BG accused of fuelling poverty as earnings rise 114% in quarter

from The Guardian

Terry Macalister

The controversy over rising gas prices was rekindled last night after the wholesale producer BG reported a 114% increase in last quarter profits and the supplier Scottish Power put its bills up by 15%.
The consumer group Energywatch accused the companies of lacking corporate social responsibility by pushing up prices and increasing fuel poverty in Britain.

BG reported full-year earnings for 2005 of £1.3bn - 64% up on 2004 - but denied that it was profiting from its North Sea production at the expense of fuel-hungry British factories and homes. A BG spokesman said: "I think it is disingenuous to suggest that. Between 30% to 40% of our output comes from the UK continental shelf but we only account for 6% of [UK] supplies in a fully liberalised market."

Industries have faced price rises of up to 90% from gas suppliers, who blame their wholesale providers, while domestic users have faced a wave of increases.
Willie MacDiarmid, Scottish Power's director of retail energy, said of its 15% price hike for gas and 8% for electricity: "Wholesale energy costs are now at record levels, up by around 80% over the last 12 months. We have worked hard to protect our customers from this over the winter.

"However, we now need to pass on a further part of the increased costs from March, when milder weather should help lessen the impact on bills," he added.

But Energywatch said Scottish Power had raised bills by 51% since 2003 and should absorb extra costs rather than pass them on so quickly to consumers. "Big upstream gas producers are making record profits while a small part of their millions could alleviate a lot of fuel poverty. The lack of corporate social responsibility is unbelievable," a spokesman said.

BG argued that it was developing important new local reserves, such as the £1.5bn Buzzard field, as well as importing gas via the Interconnector pipeline and liquefied natural gas with its Dragon LNG project at Milford Haven in south Wales.

BG's powerful performance surprised the City and BG shares rose 10% to 676p, valuing it at about £24bn, which is nearly 80% higher than a year ago. Merrill Lynch called the figures "very strong" and reaffirmed a "buy" recommendation. Cazenove also encouraged investors to buy.