Possible energy price cuts
Energy price cuts are still on the agenda after Britain's second biggest energy supplier announced an 8% increase in Generation and Supply operating profits today.
The announcement follows a flurry of recent statements from suppliers pointing to healthy UK trading results, particularly against the backdrop of the recession. With profits up and wholesale prices remaining low, households look set to benefit from further price cuts rather than price hikes this year, says uSwitch.com:
Britain's second biggest energy supplier, Scottish and Southern Energy, reports operating profit in Generation and Supply of £896 million in 2009/10 compared with £832 million in the previous year.
In February British Gas Residential reported a 58% increase in year-on-year profits - with operating profits up from £376 million to £595 million.
RWE (npower) acknowledges ‘increased contributions' and E.ON notes significantly increased EBIT from their respective UK arms so far in 2010.
Energy prices rocketed by £381 or 42% in 2008, but price cuts this year and last amount to just £102 or 8%.
Average annual household energy bill today is £1,194 - £282 or 31% higher than at the beginning of 2008.
uSwitch.com urges consumers not to be panicked into fixing their energy prices now.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Talk of an increase in household energy prices this year is premature at best and misleading at worst. The fact is that the big six suppliers are still seeing healthy profits and have benefitted from low wholesale prices for the last couple of years. This means they could be well-placed to cut their prices again in 2010, which is great news for consumers.
"Even if forward wholesale prices do start to go up we are unlikely to see an immediate impact on household bills. Because suppliers buy their energy in advance it can take up to two years before wholesale price changes are reflected on our bills. The energy companies made this point when explaining the delay in passing on price cuts to consumers so now we should expect the same set of rules to apply if wholesale prices begin to rise.
"This year offers us a brief lull. But in the longer-term prices are expected to climb again and many households will want to protect themselves from the impact of this by fixing their energy prices. However, they shouldn't feel panicked into doing so today - it's important that they fix at the right time, for the right price and for the right length of time.
"In the meantime, those who want to enjoy lower prices today should look to move onto a competitive online energy plan. These are consistently the cheapest in the market and are currently around £300 cheaper on average than suppliers' standard plans. The fact is that moving to an online plan still presents the biggest and best chance of a meaningful price cut this year."