[andco]

In order to maintain profit margins utility companies are looking to increase consumer energy bills by up to 40% http://business.timesonline.co.uk/to...MC-Bltn=NMVH49 according to leading utility analysts

Consumers could be hit by energy price rises of up to 40 per cent this year as power companies struggle to maintain profitability in the face of a trebling in wholesale gas prices.

Leading market analysts said yesterday that an increase of that magnitude would drive average UK energy bills from £1,048 at present to £1,467 within seven months.

John Hall, an adviser on energy issues to industrial and corporate clients representing 15 per cent of the UK commercial gas and electricity market, said that Britain’s six major energy suppliers would need to raise prices by between 30 and 40 per cent this year to maintain margins.

Wholesale gas prices, which are linked to global oil prices, have increased nearly threefold in a year from 36.35p per therm in June last year to 94.54p yesterday. They briefly touched record highs of about 105p per therm earlier this month. Crude oil prices have also touched a record of nearly $140 a barrel this week.

Mr Hall said: “Unless there is a dramatic fall in oil prices, that is the scale of increase we are talking about to ensure that energy companies keep their margins.”

Britain’s power companies are gearing up for a fresh round of price rises, the first of which could come as early as next month. Mr Hall predicted that a staggered increase, with one in the summer and another in late autumn or early winter, assuming wholesale prices remain at current levels, is likelier than a single increase, which would trigger a huge public outcry.

Peter Atherton, utilities analyst for Citigroup, agreed that power companies will need to consider price rises of 30 per cent-plus this year if they expect to maintain reasonable profit margins from retail distribution. However, he expected that the public outcry that would result from such big rises would lead companies to accept very low profits from their supply businesses this year and to balance that against higher earnings from power generation.

The warnings came yesterday as MPs accused Ofgem, the energy regulator, of being a toothless tiger that did not do enough to help consumers in the face of soaring energy prices.

At a Commons committee hearing, Lindsay Hoyle, Labour MP for Chorley, made a stinging attack on Alistair Buchanan, Ofgem’s chief executive. Mr Hoyle said that energy companies blamed poor planning laws for not building enough storage facilities to enable Britain to be self-sufficient but he said that it was in the companies’ interests not to tackle the problem since they stood to benefit from passing on the higher prices to consumers.

Mr Hoyle asked Mr Buchanan whether he was prepared to act now to address the issue, adding: “Or are you the toothless tiger that we imagined?”

Citigroup’s analyst thought the likeliest pricing scenario is a rise in retail prices of up to 25 per cent, which would lead to extremely thin or zero profits from retail power supply.

However, not all energy companies are in a position to do that easily. Some companies, such as E.ON, have substantial generation capacity. Others, such as Centrica, the owner of British Gas, are particularly exposed to wholesale price rises because they lack their own generation capacity.

Patrick Herren, an independent energy market analyst, said about half the cost of a household’s gas bill and one third of the cost of an electricity bill was the commodity cost of the gas itself, with the rest being made up of transport and distribution costs.

Moreover, National Grid expects gas output from the North Sea to fall 11 per cent this winter, significantly more than expected. More gas will need to be shipped to the UK from overseas as liquefied natural gas. That will put the UK in direct competition with Japan and South Korea, which are entirely dependent on LNG imports and pay top global prices.

[discovery]

Time to leave the UK then . . . . .

[Suffragette1]

Christ, at this rate we won't be able to afford any heating whatsoever. Our monthly fuel bill last winter already went up by a whopping 100%.

[pk014b7161]

at least dick turpin wore a mask .........does anyone know what we pay for our utility,s compared with the rest of europe

[taxman]

Another victory for privatisation

[discovery]

[QUOTE=pk014b7161;3675499]at least dick turpin wore a mask .........


Love it!

[BasilRathbon]

If you look carefully at the report in the opening post, it's actually speculation rather than fact.

Gas bills could rise by up to 40%. They could also fall by up to 40%, or even stay the same.

The earth "could" be hit by a giant meteorite and plunged into a new ice age, but that's no reason to start planning for it.

[Dozy]

Originally Posted by BasilRathbon

If you look carefully at the report in the opening post, it's actually speculation rather than fact.

Gas bills could rise by up to 40%. They could also fall by up to 40%, or even stay the same.

The earth "could" be hit by a giant meteorite and plunged into a new ice age, but that's no reason to start planning for it.

Very true - but I think the probability of the price of gas increasing by 40% is far higher than the probability of earth being hit by a meteorite - unless you know something the rest of us don't??

[theripsaw]

Originally Posted by pk014b7161

at least dick turpin wore a mask .........does anyone know what we pay for our utility,s compared with the rest of europe

Hmmm.. i would guess we pay a little more.. but dont you know thats a great thing- it encourages us to save the environment...