Get news updates
Get facebook updates
Get twitter updatesThere are no immediate signals that would indicate a fall in retail prices for this winter,” Nick Horler, the chief executive officer of Scottish Power, said in a letter to the U.K. energy regulator Ofgem published today. There are “risks of an increase next year.”
Last month, Ofgem CEO Alistair Buchanan asked power and natural-gas suppliers to explain why consumer tariffs hadn’t followed a decline in wholesale rates this year. The regulator is scrutinizing utilities after lawmakers raised concerns that prices are too high. Buchanan is also reviewing network charges and the way market rules are changed.
Prices are on their way up, Phil Bentley, managing director of Centrica’s British Gas supply unit, said in a separate letter published today. They are “likely to remain at historically high levels, and in fact likely to increase as non-commodity costs rise ever upwards,” he said.
Centrica, Britain’s biggest energy supplier, said in the letter that “very recent falls in wholesale costs cannot immediately be reflected in the procurement costs for suppliers” because of hedging strategies for retail customers’ energy needs.
‘Grim Predictability’
“There’s a grim predictability about Britain’s energy suppliers,” independent watchdog Consumer Focus said today in an e-mailed statement. “In spite of increased margins and lower wholesale gas prices, there is the inevitable talk of higher domestic bills.”
Utilities are still distributing power and gas that they bought 18 months ago, when prices were higher, because the companies purchase energy through forward contracts, Horler said. “It will take until the end of 2010 for this effect to fully work through the system,” he said.
Britain’s six biggest energy suppliers, which also include Scottish & Southern Energy Plc, RWE AG, Electricite de France SA and E.ON AG, lowered household tariffs earlier this year after a slump in oil prices from their 2008 peak reduced wholesale costs.
U.K. gas for delivery this winter has fallen 45 percent this year and 69 percent from a record 110.25 pence a therm in July 2008 as the global recession erodes demand and the country imports more liquefied natural gas. The corresponding electricity contract has dropped 32 percent since Jan. 1, according to broker data compiled by Bloomberg.
‘Remain Volatile’
“Higher forward annual wholesale prices and higher distribution, environment and social costs all counter the recent falls in wholesale prices,” Scottish & Southern Energy said. The U.K.’s second-biggest energy supplier is seeking to “avoid an increase in 2009 and 2010, despite the fact that wholesale energy prices remain volatile.”
RWE is carrying out a 100 million-pound ($163.5 million) cost-reduction program, including a wage and recruitment freeze, and there’s no scope for price cuts, Guy Johnson, the company’s director of regulation, said in a separate letter.
EDF said it will consider reducing prices “if market conditions allow,” while E.ON said in a letter that there’s no “clear message regarding future wholesale cost movements that can be communicated to customers.”
Original Source: Bloomberg
Solar links
Heat my Home Solar Panels UK
Solar Panels and Solar Installers and Installations
Solar Panels in the UK
Green Energy Suppliers, Providers, Schemes and Tariffs
Solar Panels Forum
Learn about Solar Heating Panels Installations
Learn about Evacuated Tubes Solar Panels Installations
DIY Solar Panels Kits
PV Solar Panels Installations
Learn about Heat Pumps Installations
Tags: energy news, gas price rises, uk energy price, uk energy price rises
