Gas dispute may cost UK consumers

Uncertainty could mean suppliers delay cuts to consumers' gas bills.

A dispute between Russia and Ukraine over gas supplies has raised fears that UK energy suppliers could delay long-awaited price cuts.

Russia's move to halt supplies to its neighbour has made wholesale market prices volatile.

Industry experts said that this could make UK energy companies reluctant to pass on recent falls in wholesale gas prices to their customers.

Energy bills are expected to fall this year after soaring in 2008.

Joe Malinowski, founder of price comparison website TheEnergyShop.com, said that a 15% fall in gas bills was warranted given last year's slide in wholesale prices.

But he said that energy suppliers could defer any decision on price cuts given the uncertainty that the dispute has created.

"Suppliers will be more inclined to be cautious," he said.

Gas for February delivery initially rose 2.5% to 60p a therm before falling back to 56p, according to Bloomberg data. Prices stood at 80p in October.

Prices down

Mr Malinowski said that gas prices have not fallen as steeply as oil prices, but they are down 40% from their peak last year.

Europe's gas pipeline network Enlarge Map

Suppliers have come under intense pressure from the government and fuel poverty campaigners to cut bills.

Mark Todd of price comparison website Energyhelpline said that some suppliers had been expected to announce price cuts in January and February, but these could now be delayed until spring.

A fifth of the EU's gas supplies transit through Ukraine.

However, Russia has assured European Union countries they will face no disruption after it halted gas supplies to Ukraine.

Russian gas giant Gazprom said it had increased the volume of gas flowing to the EU via the Ukrainian pipe network.

The European Commission is monitoring the situation closely and said on Friday that levels of supply of Russian gas to European nations did not appear to have been affected.

"This morning volumes were normal," a spokesman for the EU energy commissioner said.