Firms urged to cut energy bill

Dec 10, 2008

The major energy companies are under renewed pressure from the government to drop prices for domestic customers.

Energy Secretary Ed Miliband urged the companies to pass on savings from the falling cost of oil to consumers as soon as possible.

His comments echo those of Chancellor Alistair Darling and the head of regulator Ofgem in recent weeks.

Some of the "big six" suppliers have already suggested prices could fall early in the new year.

Householders faced two price increases for gas and electricity bills during 2008, with the average dual fuel bill going up by more than £300 over the year.

Intervention

The cost of wholesale gas is linked to the price of oil, which has slumped in recent weeks.

In a speech at London's Imperial College, Mr Miliband said: "We have recently seen big falls in wholesale gas and electricity prices, but I understand that because energy companies tend to buy in advance they won't be passed on immediately.

"But they must be passed on as soon as possible."

In his pre-Budget report, Chancellor Alistair Darling acknowledged "widespread concern" that these wholesale price changes were not being reflected quickly enough in falling household bills.

He announced that Ofgem would produce a report every three months on price changes.

Both men have said that the government would step in if there was evidence of "unfair gaps" in pricing between different payment methods, such as pre-payment meters and direct debit customers.

'No excuse'

In his speech, Mr Miliband said that there was also "no excuse" for overcharging those not on a gas grid or living in an area where a company once had monopoly control.

British Gas announced in November that it was narrowing the price between pre-payment meter bills and other forms of payment - leading to a £22 average cut in the annual bill of a dual fuel pre-payment meter customer.

And the UK's second-biggest energy company, Scottish and Southern Energy, said it was "optimistic" that domestic prices could be cut early in 2009 if wholesale gas and electricity prices continued their downward trend.

E.On also said it hoped that energy bills would come down next year.

Last week it said it would cut the annual bills of some residential electricity customers who are not on mains gas. Customers from the East Midlands, East of England and North West, who buy just electricity from E.ON, will see their annual bills reduced by £14.

Ofgem chief executive Alistair Buchanan told MPs last month that the regulator was putting as much pressure as it could on all the major suppliers to make announcements soon on bills.

The Environment, Food and Rural Affairs committee of MPs was meeting on Wednesday to quiz representatives from the industry on fuel poverty and energy efficiency.

Source: BBC

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