Ofgem Reports record profits for energy suppliers

The profit margin for energy firms has risen to £125 per customer per year, from £15 in June, says regulator Ofgem.

The profit margin figure measures the amount suppliers would make if energy prices and bills were to remain unchanged for the next year.
Ofgem predicts these profit margins, which apply to dual-fuel bills, will fall to about £90 a customer next year.
Ofgem has also confirmed it will force suppliers to simplify tariffs to make it easier to compare prices.
As part of the simplification plan, suppliers will be forced to have no-frills tariffs, which would consist of a standing charge - fixed by the regulator - plus a unit charge for energy used.
It means that the only number consumers would have to compare between suppliers would be the unit energy charge.
"The process of trying to switch from one supplier to another is hideously complicated - very off-putting even for quite intelligent people," Tim Yeo MP, chair of the Energy and Climate Change Committee told the BBC.
He also criticised the rise in profit margins to a three-year-high as, "evidence of absolutely crass behaviour by the energy companies, with a jump in prices announced in the last few months ahead of what will be a winter in which most families face their highest ever electricity and gas bills".
Market reforms More complicated tariffs would still be available, but they would have to be for a fixed period, with price increases not being allowed for the duration of the deal.
The regulator will publish its detailed proposals for consultation next month and hopes to have implemented some of its reforms in time for winter 2012.
The average dual-fuel bill is now £1,345 a year following recent price rises from all the big suppliers.
"When consumers face energy bills at around £1,345 they must have complete confidence that this price is set by companies competing in a fully competitive market," said Ofgem's chief executive Alistair Buchanan.
"At the moment that is not the case."
In addition to trying to boost competition by simplifying tariffs, Ofgem is looking at how to reform the wholesale energy markets, which are the places suppliers go to buy their energy.
Ofgem wants to reform those markets to allow greater competition with the big suppliers and will publish proposals in December.
The bigger suppliers have an advantage because they generate their own power, selling most of it to consumers, with little of it going to wholesale markets.
But earlier in the week, Scottish and Southern Energy announced plans to auction all of its power on the open market.
Ofgem has proposed that utilities must auction 20% of their electricity by 2013.

Smart homes: take remote control

Your mobile phone will soon allow you to switch your domestic electrical gadgets on and off – and cut your bills – from anywhere in the world

By Miles Bignall

 You get out of work early for once. How good would it be to be able to turn on your central heating before you get home so it's all toasty as you step through the door? Or you left for work in a hurry, and are worried that the hair straighteners are still plugged in. What a relief it would be to turn them off en-route using your mobile phone?
It might sound like something from Tomorrow's World, but both prospects are closer than you think.
In the next few months British Gas is set to start the first big trial of "smart home" technology, and, if all goes well, it plans to begin installing it commercially in customers' UK homes over the next year.
The final price is still to be settled, but the company hopes to bring the package in at under £200. For that, consumers will get the technology they need to create their first "smart home", although they'll need to pay extra for any smartplugs that allow you to turn off appliances remotely. These cost around £25 each.

The service is likely to excite gadget fiends and those hoping to reduce their gas and electricity bills. Buyers should easily save the installation cost through lower bills that result in not heating their homes when they are not there.
At its heart is a control box that is linked to the home's broadband hub. Users have to upgrade their thermostat to a (supplied) digital model, but apart from that, it should install in almost every broadband-linked home.
It effectively lets you talk to the central heating system from anywhere in the world. You can also use it to turn on, or off, other key appliances using the smartplugs that send and receive messages wirelessly to the central hub.
The technology to make it happen already exists. British Gas has set up the system in a mock home in its laboratory at its Staines headquarters, and a small group of staff are testing it in their homes.
This week Guardian Money had a sneak preview of the system that has been developed in conjunction with AlertMe, a company in which British Gas owns a 20% stake.
Sitting in our London office we were able to turn the heating and lighting in the Staines "smart home" on and off. The service has a dedicated web page which showed us which appliances had been left on.
We were able to see the inside and outside temperatures, turning the heating up and down accordingly – a boon for those who fear their partner overheats the home while they are at work.
If you don't have a smart phone, the system can be just as easily controlled with a basic text message sent from a standard mobile or any PC.
Paul Grosvenor, British Gas's head of innovation, and one of those who has been using it for the last year, says that he has definitely seen lower gas and electricity bills as a result of the tests: "Consumers are increasingly demanding the ability to do more with the latest technology, and we see 'smart homes' as the future. This technology gives you the ability to conserve energy because you use it more cleverly. You are in control, wherever you are."
He says he regularly used it last winter to change his heating settings, even turning on the system while he was away to protect the home from freezing during the really cold spell. He says he also found it a much easier way to set up his boiler timings than the original complicated system.
British Gas says the system will eventually have the ability to be customised. With smart key fobs it will be possible to configure it to shut down every appliance linked to a smart plug, plus the heating, when you leave the premises.

In the long run, it will also be linked to the home's smart meter, although it will also work with a conventional meter.
Along with the other big power companies, British Gas is already in the process of offering smart meters to every customer as they have their old ones replaced.
These are read remotely using the mobile phone network, doing away with the need for a call from a meter reader. They will also do away with estimated bills and can be linked to the latest in-home displays, that show householders exactly how much power they are consuming at any one time, both in kilowatt hours and, more crucially, in pounds and pence.
Leave too many appliances on, and the smart meter display will show a red warning light – great for those with children who tend to leave everything on.
Meanwhile, there is one drawback to the introduction of a remote control heating system – it could promote "couch potato syndrome".
Grosvenor is ashamed to admit he has used his mobile to turn up the heating from his sofa, instead of walking over to the thermostat.
"If you're lying in bed on a Saturday morning and the heating's gone off, it's very tempting to send a text to turn it on again rather than going down into a cold house," he says.

Will A Wood Burner Save You Money?

It's becoming increasingly popular for people to buy a woodburner to supplement or replace a gas or electric heating system because they simply can’t afford to pay their spiralling fuel bills. Changing to wood-fired heating saves many people a lot of money, but it takes time to recoup your initial investment in savings on fuel bills. The savings available vary, but these are the main points to consider when working out how much money you can save.

Purchase Costs
The most obvious cost is buying the woodburner. Wood burning stoves are available to suit all budgets, but the cheapest woodburners are not the most efficient. Spending a little extra to buy a more efficient stove can be worthwhile to gain savings in fuel costs over time. Bargain hunters tend to buy woodburners on the internet in order to get the cheapest prices. It can take a little work to compare deals properly – make sure the price advertised includes VAT and delivery, and see if there are any special deals on chimney liner or free fitting accessories with the stove. To ensure you have full manufacturers warranty cover on the woodburner, check that you are buying from an authorised retailer. You may also need to buy a chimney liner or flue system and accessories such as a stove pipe or register plate. If you are not sure what you need, get expert advice before you buy.

Installation Costs
Installation costs vary enormously depending what work needs to be done. If you need a flue liner for your chimney or to fit a twinwall flue system because you don’t have a conventional chimney, this will increase your installation costs. Sometimes fireplaces need to be altered for a woodburner to be installed, at an extra and sometimes unexpected cost. It is a good idea to have a stove installation survey from a  before you buy a woodburner – this will give you a clear idea of what work is necessary and the associated costs, as well as giving you an opportunity to get expert advice about what woodburner is most suitable for your requirements.
Running Costs
Research prices for firewood or coal both from local and nationwide suppliers, unless you are lucky enough to have a free source of firewood such as a friendly tree surgeon! To get the best prices on firewood or coal you need to buy in quantity – if you don’t already have a suitable storage area factor this into your budget as well. Demand for woodburners is increasing in the UK, but the Forestry Commission is implementing a program to develop the UK wood fuel industry over the coming years to ensure plenty of quality firewood will be available at reasonable prices. Recommended woodburner maintenance includes having your chimney swept at least once a year and an annual service of the stove by a HETAS qualified engineer – it’s a good idea to allocate some of your budget to cover these expenses.

British Gas Announces Price Increase

British Gas has announced it is increasing its domestic tariffs for gas by an average 18%, and for electricity by an average 16%, on 18 August, 2011.

The rise is in response to a 30.2% increase in wholesale costs. The energy company attributes the rise to the higher global demand for gas, "driven by increased consumption in Asia and the impact on supply of unrest in the Middle East and North Africa.

British Gas claims it is currently making a loss on the energy it sells, which it says "cannot continue... as it needs to be a profitable business in order to invest in future sources of energy for Britain".

British Gas' managing director, Phil Bentley, explained: "We know there is never a good time to raise prices, but we are buying in a global energy market and have to pay the market rate."

Until August, Bentley is urging current customers not to jump ship just yet. "Our advice to customers is to wait and see what happens in the energy retail market as a whole before making any decisions about switching supplier."