UK energy companies announce that prices for bills could increase

Saturday, September 19, 2009

Six energy companies in the United Kingdom have announced that it is likely that the prices for energy bills could increase over the course of 2010.

The companies, which are nicknamed the “big six” in the United Kingdom, did not pass on information that there would be price cuts in energy bills despite increasing profits. However, the companies have in fact sent a message in response saying that the prices of bills may even increase over the course of the next year. Energy company watchdog the Office of Gas and Electricity Markets (Ofgem) have estimated that energy companies will make gross margins of £170 ($276) per dual fual customer over the course of the next twelve months, due to the recent fall in wholesale energy costs.

Ofgem have said: “Our analysis shows that based on an 18-month hedging strategy and assuming that retail prices remain unchanged, projected gross margin is set to increase by around £80 for dual fuel customers over the next six months.”

The “big six” energy companies in the United Kingdom are British Gas, E-on, Npower, Scottish and Southern Energy, Scottish Power, and EDF Energy. British Gas stated: “Prices [are] likely to remain at historically high levels, and in fact likely to increase as non-commodity costs rise ever upwards.”

EDF Energy said: “[We] would of course be prepared to reduce tariffs if market conditions allowed.” Scottish Power stated: “There are no immediate signals that would indicate a fall in retail prices for this winter, and risks of an increase next year.” Scottish & Southern Energy commented: “With forward annual wholesale prices significantly higher, and with upward pressures in terms of distribution, environmental and social costs, seeking to avoid an increase between now and the end of 2010 is an important goal.”

Meanwhile, a study by Consumer Focus in early September 2009 suggested that “energy companies were overcharging customers by £100 ($162) every year. A spokesperson for Ofgem said that there was no evidence of any cartel in operation, or evidence of profiteering. The spokesperson commented: “It is up to the companies themselves to decide whether to cut their bills. Consumer Focus data suggests that Scottish Power has increased dual fuel prices by the most since 2003 – up 148% – while decreasing prices by 0.6% so far this year. RWE’s Npower has increased tariffs by 132% since 2003, but has reduced bills by 2.7% in 2009.”