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Power giants being cut down to size

When Ignacio Galan opened the new headquarters of ScottishPower last week he spoke ambitiously of the company’s £8 billion planned investment.

The Spanish head of parent company Iberdrola said Glasgow had been ScottishPower’s home for more than 60 years, and “we are very pleased to be committing our long term future to the city”.

He made no mention, of course, of the 100,000 customers who are no longer committed to ScottishPower.

Chief corporate officer Keith Anderson yesterday spoke of “fierce” competition in the energy supply market and, as well as revealing the loss in customer accounts, he had to admit to a 76% slump in profits at its generation and supply arm.

ScottishPower is not alone among the “big six” in losing its grip. Perth-based SSE, trading as Scottish-Hydro, blamed a “highly competitive” market after seeing 230,000 customers switch to other suppliers.

These are not random figures, nor a blip. There has been a steady decline in customers committed to the major companies as newcomers have emerged promising not only lower tariffs but a commitment to ethical trading.

There are now a record 58 firms in the UK market and the so-called challenger firms are gradually taking a larger share as customers warm to their alternative offering.

Energy companies became the new banks in the consumers’ list of businesses they love to hate as they reacted to what were seen as unjustified price increases at a time of falling oil and gas wholesale prices.

In April, 41% of the switches were from larger firms to smaller ones as customers responded to the latest round of price hikes.

Even the Prime Minister Theresa May joined in with her comments on “rip-off” tariffs. Both her party and Labour promised to introduce caps on prices.

The energy companies have done little to help curry favour with customers, boosting their own salaries “banker-style” at a time when customers are being asked to pay more.

It was revealed last month that Alistair Phillips-Davies, chief executive of SSE was awarded a 72% pay rise, taking his remuneration to £2.92m.

 

 

 

 

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