Customers must pay more:
One of the UK's biggest power companies dashed consumers' hopes that domestic energy prices are about to fall by warning yesterday it will raise gas and electricity prices in the new year. Despite a recent 25% fall in wholesale gas prices, Scottish & Southern Energy will publish increased tariffs for its 7 million domestic customers over the coming weeks in an attempt to "get back into the pack". SSE's chief financial officer Gregor Alexander told City analysts of the proposed increases, which were described by the consumer group energywatch as "lamentable". The company had pledged not to increase prices further in 2006 after announcing price rises this year of 13.6% and 15.9%, and there were rising hopes among users that the next direction for prices would be down. SSE argued it was the cheapest supplier in the UK and its dual-fuel customers are now paying 20%-24% less that the most expensive supplier, British Gas. "The consequences of three years of high wholesale energy prices are still being felt and unfortunately there is no doubt that the next price movement in electricity and gas prices will have to be upwards," said a SSE spokeswoman. Although wholesale prices are still about 180% higher than they were in January 2003, the crucial wholesale price for one-year-forward delivery has fallen by almost a quarter since April. It is now the same level as it was this time last year. Yesterday the company declined to reveal the size of the increase but analysts estimate that SSE could raise gas bills by a further 15% and electricity by 8% to get back in line with its rivals. Allan Asher, chief executive of energywatch, admitted Scottish and Southern Energy's customers had benefited from comparatively low prices for some time. "That the company is to increase its tariffs is as inevitable as it is lamentable," he said. "Major problems with electricity generation and upstream gas supply mean the UK energy market is anything but competitive. Energywatch wants a full Competition Commission inquiry, as there has been in Europe, to fix the problems of the UK energy market." The row developed as the National Grid, which operates the infrastructure, said that supplies could be maintained to domestic customers even in the most severe winter. Ofgem's confidence that there should be no shortages in the colder months came with a qualification from its chief executive, Alistair Buchanan. Ofgem, he said, "is still concerned about the lack of information on how much gas will flow into the UK this winter from continental Europe". " 22.9.06