Energy companies 'hike dividends'
September 5, 2008
The "big six" energy suppliers increased their shareholder dividend payouts by 19% last year, according to new research.
The suppliers paid £1.64bn in dividends in 2007, £257m more than the year before, a study commissioned by the Local Government Association found.
The news comes shortly after Gordon Brown said there would be no one-off fuel payment to help poorer households.
Instead, ministers are likely to focus on new energy-efficiency measures.
Rises
The research found that Centrica upped its payout to shareholders to £478m from £409m in 2006 while EDF increased its dividend from £105m to £110m.
Meanwhile, Scottish and Southern Energy's dividend rose to £474m from £400m and RWE Npower saw a jump from £37m to £250m.
E.ON paid £240m worth of dividends in 2007, after paying nothing in 2006.
Scottish Power was the only supplier to buck the trend, cutting its dividend from £427m to £83m.
LGA's acting chairman, Sir Jeremy Beecham, said the figures showed that energy companies were not necessarily guarding profits to invest in new future technology.
"This research torpedoes the energy companies' justification for their profits," he said.
But the Energy Retail Association - which represents the big suppliers - said that companies were at liberty to decide their dividends and that shareholder payouts did not effect investment plans.
"This payment to shareholders is not an alternative to the commitment by energy companies to invest tens of billions of pounds in Britain's energy infrastructure," said its chief executive Garry Felgate.
"To think otherwise is to misunderstand the nature of the investment that is already being made by the industry to deliver energy security and to meet environmental targets."
Political pressure
The Government has come under increasing pressure from trade unions and Labour backbenchhers to help poorer families deal with the rising cost of energy via a one-off tax on the profits of utility companies.
Thus far, Chancellor Alistair Darling has resisted the calls saying this would make the market less competitive.
The LGA has agreed, saying that a push by energy companies to finance a £500m national home insulation programme over the next five years would be more effective.
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