An ill wind blows much good for energy companies … and consumers
February 5, 2010
The cold winter has boosted British Gas’s profits and this has helped them reduce prices - which in turn looks to be provoking a price war. The Times Online writes:
- Britain’s big energy companies are on the brink of a price war after British Gas cut its prices by 7 per cent. The reduction, which will benefit about 8 million households, is expected to start a battle for customers with E.ON and RWE npower thought to be among the companies considering a cut as early as next week. Scottish and Southern Energy and Scottish Power are also believed to be studying price reductions.
- Centrica, the owner of British Gas, which is Britain’s biggest energy supplier, has been criticised for resisting pressure to reduce the price of gas all winter despite falls in the wholesale gas price that began more than 18 months ago.
- “Consumers could have seen prices fall earlier,” said Audrey Gallacher, energy expert at Consumer Focus. “Energy companies should have passed on the wholesale price cuts before winter.” John Hall, an independent energy analyst, pointed out that the wholesale price of gas was about 35p per therm yesterday, about one third of the levels of more than 100p per therm during mid-2008. A year ago, prices were at 60p per therm — nearly double the current levels.
- In an announcement that is likely to add to the anger felt by many hard-pressed consumers, British Gas is expected to report bumper profits at the end of this month of £540 million for 2009.
- The unusually cold weather in December, which forced people to use their central heating systems more often, prompted City analysts to raise their profit forecasts for the company by at least £10 million.
- The business is thought to have benefited by about £1.5 million in extra profits each day during the period from mid-December to mid-January when Britain was affected by its most severe bout of winter weather in decades.