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16 June 2010 Energy Prices On The Way Up Warns Consultancy
M&C Energy Group (M&C Energy Group), the UK's largest independent energy consultancy, warned today that the next move in domestic electricity and gas prices could be upwards - as OFGEM published its latest figures on supplier margins.
The regulator's latest quarterly Electricity and Gas Supply Market Report, published today (Wednesday, June 16, 2010), indicates that supplier margins have fallen from recent historical record levels, although average 'dual fuel' bills remain near their peak at over £1,100 per household.
David Hunter, energy analyst for M&C Energy Group said: "This report virtually constitutes a signal to the 'Big 6' energy suppliers that increases are justified.
"OFGEM's report highlights that net margins for suppliers are likely to have fallen to £70 a year per dual fuel customer, down from £95 in February.
"While the regulator admits that profits are still above historical averages, the report fails to highlight that margins for those not on online 'dual fuel' deals are more than 20% higher.
"More importantly, there is little perspective - the supply report doesn't show that these companies are making massive profits on the commodity as they generate electricity or bring gas from the ground.
"The major suppliers already have huge profits built in to their 'wholesale costs', so what we are seeing in the report is only the tip of the iceberg. The real indicator is the parent companies' growing profits and increasing dividends."
Hunter warned: "Over the last quarter, wholesale gas and power prices in the UK have risen by more than 30%. While they are much lower than the peak in prices seen two years ago, there is a danger that the suppliers will use the report's findings as a green light to increase bills.
"The energy companies argued when the market price fell that they couldn't pass through reductions because they had bought ahead in the markets when wholesale costs were higher. In the summer of 2008 however, when the markets rose, home bills followed very quickly - this autumn will be a major test of whether the reluctance to pass on market changes only works one way."
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For further press information contact judith@olearypr.co.uk on 07825 304408
The regulator's latest quarterly Electricity and Gas Supply Market Report, published today (Wednesday, June 16, 2010), indicates that supplier margins have fallen from recent historical record levels, although average 'dual fuel' bills remain near their peak at over £1,100 per household.
David Hunter, energy analyst for M&C Energy Group said: "This report virtually constitutes a signal to the 'Big 6' energy suppliers that increases are justified.
"OFGEM's report highlights that net margins for suppliers are likely to have fallen to £70 a year per dual fuel customer, down from £95 in February.
"While the regulator admits that profits are still above historical averages, the report fails to highlight that margins for those not on online 'dual fuel' deals are more than 20% higher.
"More importantly, there is little perspective - the supply report doesn't show that these companies are making massive profits on the commodity as they generate electricity or bring gas from the ground.
"The major suppliers already have huge profits built in to their 'wholesale costs', so what we are seeing in the report is only the tip of the iceberg. The real indicator is the parent companies' growing profits and increasing dividends."
Hunter warned: "Over the last quarter, wholesale gas and power prices in the UK have risen by more than 30%. While they are much lower than the peak in prices seen two years ago, there is a danger that the suppliers will use the report's findings as a green light to increase bills.
"The energy companies argued when the market price fell that they couldn't pass through reductions because they had bought ahead in the markets when wholesale costs were higher. In the summer of 2008 however, when the markets rose, home bills followed very quickly - this autumn will be a major test of whether the reluctance to pass on market changes only works one way."
/ends
For further press information contact judith@olearypr.co.uk on 07825 304408
