Energy Companies: should they have a right to make excessive profit?

15 Sep 2014|Added Value

Winter is coming, the prime time for energy companies. The six largest energy companies in the UK are British Gas, Npower, Scottish & Southern Energy (SSE), Scottish Power, E.ON and EDF. In generating and supplying electricity and gas to our homes and businesses, the ‘Bix Six’ made a combined £1.2 billion in 2012 just from their household supply, five times higher than it was in 2009. Now in 2014, with a mild summer behind us, an increase in independent ‘greener’ suppliers and energy watchdog, Ofgem, starting the biggest investigation yet into the energy market on profiteering, are the profits going to crumble… we ask should Energy companies have a right to make excessive profit for their business?

Answer: Yes

Should privately owned commercial grocers, drinks producers, farmers, banks, car makers, butchers, bakers and candlestick makers be allowed to make money? Yes. Then why not gas and electricity providers? We have somehow got to a point where we think that energy is like the air we breathe, something that we shouldn’t have to think about, that it should just be there on demand. But the reality is we have to make it. And it’s difficult, disruptive, dirty, dangerous and expensive, coming from parts of the world that include war zones, areas affected by strong political and government issues, submerged in the deep sea and or buried under vast hard rocks. These companies are challenged to ‘bring home the bacon’ from these hostile environments. Then you have to deliver against demand; the ever-growing population, rising modern lifestyles and energy supplies drastically reducing requires a massive and complicated (and yes, expensive) infrastructure. Not to mention funding needed to explore future sustainable energy possibilities. As private companies they need profits to endure and remain in the game of an extremely volatile competitive global market, and keep us on the (grid) map. Written by Jill Gainsburgh, HR Advisor UK. 

 

Answer: No

In the modern world, energy is as much a basic human right as food and shelter. We need it to live. But with soaring costs, some are forced to cut back on something they should not have to. Many of the elderly and young families are forced to bundle themselves up in blankets as they cannot afford to pay their exorbitant heating bills, affecting their quality of life. I accept that energy companies need to charge more than the physical cost so that they can thrive, but with profits increasing at such a rapid rate over the past few years, it makes you start to wonder when it will end. Unless prices are regulated, or energy tax is introduced, we will continue to be held at gunpoint for a basic service that we need to function. At least the government regulation will assist in starting to create an honest model and hopefully one where consumers can begin to trust energy companies more. I wonder if history will look back and wonder why governments and people let these corporations abuse both their customers and the planet. Written by Kate Tower, Project Manager, UK

 

Answer: Neutral

I believe as marketers we should hone in on the actual problem of what has gone wrong with the value exchange between consumers and energy companies for this question to even be asked. The solution could just be as simple as a change in communications. As a consumer when you buy an item of food (another commodity) you have some concept of the costs involved; where it came from, the production process, how scarce it is and the value, etc. Consumers like to know the background of goods, particularly when they are paying for these. Whether that be telling stories of the history, context and methods that enable energy to reach our houses, or answering the questions of when and why prices have risen. A modest explanation may result in consumers being more loyal and understanding, especially in a world where big corporations are increasingly being held accountable for their ethical practices. Overall the answer lies in a good brand and marketing strategy, adjusting behaviours and communications, which will help turn around the current quagmire of negative public perceptions of the entire energy industry, which in turn could potentially lead to even more profit, but in a way that is more acceptable to their customers. Written by Lucy Cox, Associate Director, UK

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