Page last updated at 11:06 GMT, Wednesday, 12 November 2008

Energy prices 'could fall soon'

Gas flame
The big six energy providers all raised prices twice this year

The UK's second biggest energy company says it is "optimistic" that domestic prices could be cut early in 2009.

Scottish and Southern Energy said the reduction could come if wholesale gas and electricity prices continued their downward trend.

The hint came as it announced half-year pre-tax profits fell 54% to 302.6m.

The firm, one of the big six suppliers which all increased prices twice this year, last raised gas prices by 29.2% and electricity by 19.2% in August.

The energy companies have come under pressure to lower bills after recent falls in the wholesale prices of gas and electricity.

Drop plan?

"If wholesale prices for electricity and gas maintain a downward trend, Scottish and Southern Energy is optimistic that it will be able to deliver reduction in prices for domestic customers during the early part of 2009," said the company, which has 8.9 million UK customers.


5 July - EDF Energy
Gas up 22%, electricity up 17%

30 July - British Gas
Gas up 35%, electricity up 9%

21 Aug - Eon
Gas up 26%, electricity up 16%

21 Aug - Scottish & Southern
Gas up 29.2%, electricity up 19.2%

29 Aug - Scottish Power
Gas up 34%, electricity up 9%

29 Aug - Npower
Gas up 26%, electricity up 14%

But it stressed that energy was bought through a variety of long and short-term contracts, which meant there was a time lag between changes in wholesale prices and changes in domestic prices.

Consumer groups have warned that people face a strain on their finances during a cold snap after the price hikes of the last year.

"The crippling price hikes that added an extra 42% or 381 onto the average household energy bills this year have yet to be played through into winter bills," said Ann Robinson, of price comparison website Uswitch.

"Consumers need to be aware that the promise of a future price cut will not limit the impact of energy prices this winter, so they still need to take action now to protect themselves."

Price row

Scottish and Southern's announcement comes just a day after the chief executive of watchdog Consumer Focus called for swift price cuts.

Ed Mayo told a committee of MPs that he wanted one of the big companies to break ranks and pass on price cuts or explain why not.

This provoked a strongly-worded response from the Energy Retail Association, which represents the main energy suppliers.

"Consumer Focus has no evidence on which to raise consumers' expectations that a cut in energy prices is possible. This is a simplification too far," a spokesman said.

"There would need to be a sustained fall in wholesale gas prices before energy companies could consider any price changes."

A recent report by regulator Ofgem gave the big six suppliers a relatively clean bill of health, saying that they were not colluding on price and that the market was working well for most consumers.

The other companies that dominate the market are Npower, EDF, British Gas, Scottish Power, and E.On.

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