May 25, 2006 | posted by Michael Baxter in Uncategorized |

The latest profit announcements from Scottish Power
caused much rancour. Annual pre tax profits have surged, hitting £675 million, 49
per cent up on last year. The UK’s fifth largest energy provider has upped gas prices
to customers by 15 per cent so far this year, while electricity prices have been
increased by 8 per cent.

The press and pressure groups didn’t like it. The consumer body Energywatch
described the Scottish Power price hikes as an “assault on the budgets of Britain’s
poorest households”. In the meantime, a statement on the simplyswitch.com web site
said: “If Scottish Power does increase their prices again, it may be too much for their
loyal customer base. Customers will realise that there is no prize for loyalty, and vote
with their feet, as we have seen with British Gas.”

But there is another side to the tale. Scottish Power’s chief executive Philip
Bowman put it like this: the residential energy business lost money, and the profit
making parts of the business should not subsidise prices. He explained that the
company plans to invest £4.8 billion between now and 2010. Much of this money
will be spent on measures designed to help the environment, for example on more
wind farms.

The truth is, of course, that energy prices are going up at present. If more energy
is produced without causing horrific damage to the environment, presumably
something else must give. Everything has a price. And energy that causes less
pollution will cost us. That’s simple economics. You can’t have your environmentally
friendly cake, and eat lots of cheap energy cakes too.