Energy companies in bother

Scottish energy companies ScottishPower and SSE are in trouble with the regulator Ofgem for failing to meet targets aimed at improving energy efficiency in homes of vulnerable customers.

ScottishPower only met 70% of its targets under the Community Energy Saving Programme (CESP), while SSE achieved 90.9% of the target and only failed because of some verification shortfalls. British Gas (including Scottish Gas brand) met less than two-thirds of its targets.

Both Scottish energy firms insisted they had completed the required work – but not in time for Ofgem’s December deadline, despite reminders that enforcement action would follow.

A spokesman for ScottishPower said: “In December, we told Ofgem we had completed 70 per cent of the work on target and had begun work to complete the remaining 30 per cent by April this year.”

An energy company suffering much more reputational damage is NPower. They have not been paying UK Corporation Tax by using some classic tax avoidance mechanisms. Richard Murphy of the Tax Justice Network has exposed their methods.

Npower is a complex group of companies, even in the UK, and much more so when considered as a part of its German parent company, RWE Ag. They do not provide a single set of accounts for the UK, which has added considerably to the confusion surrounding this issue.

Npower has issued several quite different reports of its trading and profits in the UK. Depending upon the source used sales vary by hundreds of millions of pounds whilst profits reported by RWE and Npower for the UK vary between about £310 million in 2011 according to two reports, £240 million according to two other reports and a loss of £38 million according to the accounts of RWE Npower plc. It is almost impossible to tell which of these claims is correct. What is, however, clear is that according to RWE, (Npower’s parent company), it has a profitable operation in the UK. That is true even after the costs of new investment in the UK are taken into account;

As a result it appears that Npower is shifting its profits from the UK to Malta by paying interest to a company based there with the only likely motive being a desire to avoid tax in the UK and in turn, and in due course, in Germany. Missing Malta out of the structure would mean that the tax was not avoided and as a result its use suggests that tax avoidance is occurring.

And the loser is the British tax payer and the public services this tax would have paid for.

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