Energy prices will keep on rising
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The leaders of Britain’s big energy companies recently appeared before a committee of MP’s and admitted that energy prices will be going up again in the near future and quite probably they will be going up considerably.
The comments came at a meeting of the business and enterprise select committee where MP’s were asking the bosses to defend the big increases in gas and electricity prices facing households and businesses in the UK.
Finance industry sources have suggested households could pay £400 more a year on average for gas and electricity. The wholesale gas price is closely linked to the price of oil, which itself hit a record high of just under $140 a barrel this month.
It was suggested that the energy market is in effect “rigged” by long-term contracts for the supply of gas and electricity involving the big European energy producers, who are accused of excluding any competition that might drive prices down.
The industry executives surprised some of the MPs by arguing that they needed more financial incentive to invest in building new power stations. Despite the record high prices of oil, gas and electricity, Andrew Duff, the chief executive of Npower said: ‘We are in a very difficult transition phase where the forward returns barely cover the cost of the investment.’
MPs also pressed energy chiefs on the extra help being given to low-income and disadvantaged households to help them with the impact of rising bills. The watchdog Ofgem, which is conducting its own inquiry into the market, outlined plans last month to share data on people on low incomes with energy companies to help people pay their fuel bills.
The government estimates that 2.5 million households are in fuel poverty, defined as when more than 10% of household income is spent on fuel bills, but another watchdog, Energywatch, says the figure is more than four million.
A 40% rise in average fuel bills would be far higher than expected and would put more pressure on homeowners already struggling with higher food and fuel costs. However, some analysts believe the increases will be closer to 25%. Add to this that payments for mortgages and homewoner loans have increased substantially.
It is thought that any price announcements are most likely to come in August, when energy bills are not at the forefront of people’s minds. But there is a great reluctance in the industry to be the first to reveal a big rise, so the rises may be unveiled in stages.
There is little doubt that energy companies are facing a global rise in prices that they are simply passing on to their customers. It will be interesting to see if the savings are passed on as quickly if the energy prices begin to come down again.
June 27th, 2008 at 2:56 am
the effects of this energy price climb are devastating on many people. I know so many people that can barely afford the basic things they were used to anymore and are now in debt to sustain themselves and their families.
……………………………….
Diana King
short term loan