British Gas, the country's largest energy supplier, is preparing for a fresh round of energy price rises of at least 15 per cent, which could hit its 16 million customers within a matter of weeks.
Centrica, the owner of British Gas, is struggling to maintain profitability in its retail energy business as gas prices have trebled over the past year. Wholesale gas prices soared to a fresh record last week, adding to the pressure on Sam Laidlaw, the chief executive, to act swiftly to ensure the business is not forced into a loss this year.
UK forward gas prices for delivery in January 2009 touched a high of £1.13 per therm last week, up from 50p per therm a year ago. The price of gas is closely linked to crude oil, which rose to a new record of nearly $146.69 a barrel on Thursday.
Compounding the pressure on Britain's power companies, wholesale coal prices were also driven to record levels last week. The price of the benchmark contract for a tonne of coal for European delivery in the third quarter of this year hit $225 this week, up from less than $80 a year ago. Coal is still used to generate 30 to 35percent of UK electricity.
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Monday, 7 July 2008
Sunday, 6 July 2008
Watchdog will probe high cost of our electricity
THE energy watchdog is to probe why Welsh consumers are paying more for their electricity than the rest of the UK.
Ofgem says it will examine the situation in Wales as part of an investigation into the energy supply market following lobbying by Environment Minister Jane Davidson.
Independent research commissioned by consumer watchdog Energywatch found Welsh consumers typically pay £408 – 3% more than the £396 charged in Scotland, and 7% more than the average £381 paid in England.
And customers in South Wales pay around 5% more for electricity than North Wales – equivalent to an extra £20 per year on bills.
Around 240,000 households in Wales are believed to be in a state of fuel poverty – spending more than 10% of income on fuel.
Victoria Winckler, director of the Tredegar-based Bevan Foundation, said children in such homes were more likely to suffer from asthma and chest infections.
She said: “The number of households that are affected is appalling.
“What’s clear is fuel poverty is caused by a vicious mixture of things – high fuel prices, inefficiently heated homes and low incomes.”
Ms Davidson said: “At a time when more people are at risk of fuel poverty due to rising prices it is important that Ofgem looks at regional price differences to ensure that Welsh consumers are charged the same as other parts of the UK.
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Ofgem says it will examine the situation in Wales as part of an investigation into the energy supply market following lobbying by Environment Minister Jane Davidson.
Independent research commissioned by consumer watchdog Energywatch found Welsh consumers typically pay £408 – 3% more than the £396 charged in Scotland, and 7% more than the average £381 paid in England.
And customers in South Wales pay around 5% more for electricity than North Wales – equivalent to an extra £20 per year on bills.
Around 240,000 households in Wales are believed to be in a state of fuel poverty – spending more than 10% of income on fuel.
Victoria Winckler, director of the Tredegar-based Bevan Foundation, said children in such homes were more likely to suffer from asthma and chest infections.
She said: “The number of households that are affected is appalling.
“What’s clear is fuel poverty is caused by a vicious mixture of things – high fuel prices, inefficiently heated homes and low incomes.”
Ms Davidson said: “At a time when more people are at risk of fuel poverty due to rising prices it is important that Ofgem looks at regional price differences to ensure that Welsh consumers are charged the same as other parts of the UK.
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Saturday, 5 July 2008
Sort the Winter Fuel Bills While the Sun is Shining
With warnings of 40 per cent rises in gas and electricity prices in coming months, now is the time to limit the impact of dearer bills ahead of winter. "Review energy costs and switch to a cheaper supplier where possible," says Tim Wolfenden, head of home services at energy comparison website uSwitch.com.
"It is worth giving serious consideration to fixed-rate and capped tariffs," he says. "Though you may pay a premium for that peace of mind, the deals could more than pay for themselves over the next year or two if energy prices do rise by 40 per cent."
ScottishPower, Eon and British Gas are offering tariffs fixed until the end of August 2009, while npower will fix rates until the end of December 2010.
A household using 3,300 kWh of electricity and gas a year -- the typical usage of the average household -- could get a fixed bill of £1,022 with ScottishPower. The same household could fix at £1,046 a year with npower until 2010.
But Joe Malinowski at energy price comparison website TheEnergyShop.com says consumers who want a fixed or capped deal should not delay.
Wholesale gas prices are outstripping retail prices and this is a clear indication that bills will have to rise. This will mean providers will withdraw their current competitive rates and reprice them.
"The last time wholesale gas prices broke above retail gas prices was three years ago, in June 2005," he says. "In the following 18 months, energy bills rose by a record 47 per cent. Do not ignore these warning signs. They spell bad news and you need to take steps to protect yourself now.
"We don't know whether average energy bills will be £1,300, £1,500 or even £1,700 in a year, but what we can be sure of is that they will be a lot higher than the £1,050 you can typically fix at today with some of the most competitive tariffs," he says.
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"It is worth giving serious consideration to fixed-rate and capped tariffs," he says. "Though you may pay a premium for that peace of mind, the deals could more than pay for themselves over the next year or two if energy prices do rise by 40 per cent."
ScottishPower, Eon and British Gas are offering tariffs fixed until the end of August 2009, while npower will fix rates until the end of December 2010.
A household using 3,300 kWh of electricity and gas a year -- the typical usage of the average household -- could get a fixed bill of £1,022 with ScottishPower. The same household could fix at £1,046 a year with npower until 2010.
But Joe Malinowski at energy price comparison website TheEnergyShop.com says consumers who want a fixed or capped deal should not delay.
Wholesale gas prices are outstripping retail prices and this is a clear indication that bills will have to rise. This will mean providers will withdraw their current competitive rates and reprice them.
"The last time wholesale gas prices broke above retail gas prices was three years ago, in June 2005," he says. "In the following 18 months, energy bills rose by a record 47 per cent. Do not ignore these warning signs. They spell bad news and you need to take steps to protect yourself now.
"We don't know whether average energy bills will be £1,300, £1,500 or even £1,700 in a year, but what we can be sure of is that they will be a lot higher than the £1,050 you can typically fix at today with some of the most competitive tariffs," he says.
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Watchdog criticises firms' transfer policies
Two small business energy suppliers have been heavily criticised by the industry watchdog for taking advantage of the inefficiencies of their larger rivals and imposing "savage" time restrictions on their contract transfer policies.
Energywatch has singled out gas provider Business Energy Solutions (BES) and Electricity4Business (E4B) for censure, referring multiple customer complaints against both suppliers to Ofgem, the regulator, for consideration.
Both use contract conditions to insist customers switch to new suppliers within a certain timeframe after contracts expire: in the case of BES this is 24 hours and E4B has a seven-day cut off. Any that have not managed to switch by then are automatically renewed on new long-term contracts with BES and E4B. The problem is that switching takes longer than many small business owners think.
The market is dominated by six big suppliers - British Gas, Powergen, Npower, EDF, Scottish Power and Scottish & Southern - and between them they control over 95pc of the market. Energywatch says it takes on average four weeks for the process to complete, although this is contested by E4B, which says it can switch customers to a new supplier "at the press of a button".
Industry regulations mean suppliers can only begin the transfer process 28 days before the end of a contract, so on Energywatch's calculations the terms imposed by BES and E4B leave little margin for error.
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Energywatch has singled out gas provider Business Energy Solutions (BES) and Electricity4Business (E4B) for censure, referring multiple customer complaints against both suppliers to Ofgem, the regulator, for consideration.
Both use contract conditions to insist customers switch to new suppliers within a certain timeframe after contracts expire: in the case of BES this is 24 hours and E4B has a seven-day cut off. Any that have not managed to switch by then are automatically renewed on new long-term contracts with BES and E4B. The problem is that switching takes longer than many small business owners think.
The market is dominated by six big suppliers - British Gas, Powergen, Npower, EDF, Scottish Power and Scottish & Southern - and between them they control over 95pc of the market. Energywatch says it takes on average four weeks for the process to complete, although this is contested by E4B, which says it can switch customers to a new supplier "at the press of a button".
Industry regulations mean suppliers can only begin the transfer process 28 days before the end of a contract, so on Energywatch's calculations the terms imposed by BES and E4B leave little margin for error.
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