ScottishPower Grab A Bit More

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The posts with the highest viewing figures so far have been the ones regarding the means by which that famous Spanish company ScottishPower extracts extra money from its customers to pay for its chairman's well-deserved salary. If you missed them you can catch up here and here.

The trigger for those posts was the realisation by the folk at CATS (shiny new site) that SP had been extracting a little bit extra from their customers to pay for "government obligations".  At that time the supplement was 6%. Well they just got a bit greedier, as we can see below.


Retrieved from here on 30th August 2011.

The "obligations" part of the bill is not laid out in plain sight, but is amalgamated with VAT. Although the Standard Rate of VAT went up to 20% on 4th January, the rate applied to energy supplies remained unchanged at 5%. So the amount charged by SP for this highly dubious impost has increased from 6% to 7%.

SP quite rightly came in for a lot of critcism lately by being the first of the big power generators to raise its prices in the summer. For electricity the increase was 10%. This was because "Wholesale prices for gas and electricity have increased significantly since the end of last year...".

Really? Let's have a closer look.


Firstly, here's the proof that the charge has increased. The first graphic is the equivalent of the one above, but archived by the Wayback Machine here on 10th May 2011 (at 08:28, as it happens). And to prove they weren't too embarrassed to collect it, the second is a ScottishPower electricity bill from September 2010, showing the makeup of the charge.




Click to enlarge Click to enlarge


We know that this charge increased sometime between 13th August and 30th August but we're not sure just when. If you are an SP customer did you receive any notification that it was increasing? So far we have not found any evidence that SP's customers have been notified of this change.

A comparison of the two years' bills is shown below.


And the raw data is:

(%) 2010 2011 Change
Wholesale cost 62 42 -33
Delivering to the Home 18 26 44
Account Maintenance 9 20 222
VAT 5 5 0
Government Obligations 6 7 17


We can see (from the right-most columns in the graph) that the combined charge for "VAT and Government Obligations" has indeed increased from 11% to 12% over this year. This is only a 1% increase in the bill but equates to a 17% increase in the actual charge.

But this is a very small change compared to the other increases. "Delivering to the Home" has gone up by 44% and it is difficult to see why that has happened. It is possible that the colder weather we have had over the past few winters has led to an increases in powerline maintenance costs, but as we're constantly being told that the world is getting warmer that can't be the real reason, can it?

Of more concern to SP shareholders must be the 222% hike in administrative costs. What could have possibly caused such a huge increase? I have no idea. Many years ago (in 1998 to be precise) I was employed in the setting up of the ScottishPower billing systems and they see to have worked reasonably well since then. What could possibly have caused such a failure in account maintenance? I think ScottishPower shareholders should be told. Oh, hang on a minute, I am a ScottishPower shareholder. (Well, to be more precise, I own some Iberdola credits, or whatever they're called, worth a total of about £86. These are the rump of the real ScottishPower shares I bought many years ago when Mrs Thatcher was selling off all of the family silver and SSEB was next on the block. I'll write to them to see if they can explain this massive increase in administrative costs and report back.)

But the big cost for power generators is always the cost of actually converting the energy from whatever form they find it in to a nice 50Hz supply to send down the line to consumers. Remember from above, that "Wholesale prices for gas and electricity have increased significantly since the end of last year". But SP's own figures shown here demonstrate that the proportion of the bill due to generating costs has gone down by 33%. Aaagghhh! Brain Fade!!

But that nice Mr Jack at SP told us prices have gone up. Surely he can't be wrong? SP generate, or buy power generated by, oil, gas, coal, nuclear and renewables. The price of uranium is fairly stable and it is bought many years in advance, so it can't be that. We'll have a closer look at the price of the prices of oil, coal and gas in the graphs below. As always, click for a larger version.


That looks like quite a lot of volatility in raw fuel prices, doesn't it? It's not really, I've just used one of the favourite tricks of unscrupulous bloggers and conmen and adjusted the graph axes to make a point. A better graph is given below and it doesn't look nearly as scary.


The raw figures are given at the bottom of this post. What we can see is that the figures don't bear out Mr Jack's assertion regarding significant increases in wholesale costs. Gas is down 8% over the period and oil is only up 8%. Coal has increased by 32%, but is till over 30% cheaper than it was at its peak in 2008.

So gas is slightly down, oil is slightly up and the increase in the coal cost is offset by the reduction in proportion of the bill due to generating cost. How can they justify the 10% increase in electricity prices? Even more perplexing, how do they justify a 19% increase in gas charges when we have seen that gas is cheaper this year than last?

But most of all, how in the name of the wee man do they seriously expect to get away scot-free with grabbing more money to pay for the types of generation not mentioned above? Is this to compensate for the fact the Whitelee Elephant, Europe's biggest on-shore wind farm seems to have been switched off since June and may be off-line for some time to come?

I think we should be told.

Data for fuel graphs:


Oil ($/barrel)

Coal ($/tonne)

Gas ($/dekatherm)

August 2010 80.70 96.19 4.774
September 2010 74.60 101.66 3.651
October 2010 81.58 104.41 3.837
November 2010 86.85 114.81 3.292
December 2010 89.19 126.74 4.267
January 2011 88.03 141.94 4.216
February 2011 89.03 137.53 4.316
March 2011 104.42 135.14 3.793
April 2011 107.94 131.25 4.240
May 2011 97.18 126.84 4.377
June 2011 100.22 127.80 4.326
July 2011 94.94 128.57 4.357
August 2011 86.88 127.29 4.370
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