Scottish and Southern Energy, delaying the inevitable:
Scottish and Southern Energy (SSE) has promised no further domestic price rises in 2006 following the solitary rise made at the beginning of the year. In contrast, the other major UK suppliers have introduced at least two increases in 2006. However, while this may make SSE popular with customers for the next few months, saving its next increase until 2007 could simply prove a case of bad timing. In recent months, the cost of winter energy has fallen by up to 30%, although, on an annual basis, the cost of wholesale energy remains on par with the same period last year. Energy suppliers that announced prices rises a few months ago are seeing annual wholesale prices drop by up to 6% between the announcement and implementation date. Energy traditionally traded for the main October contract negotiation round tends to see price decreases in the latter part of summer when customers have secured their energy requirements. This year, sentiment within the industry suggests that lower prices are still to come from new gas imports, further fuelling the decrease. As energy prices still remain as expensive as last year, suppliers and customers need to be aware that the worst may not be over yet. Suppliers are potentially facing their last chance to raise domestic prices this winter and with SSE now confirming an increase in early 2007, this could go against the company, which has recently been the cheapest domestic energy supplier. SSE?s price rise in early 2007 could prove especially bad timing as other suppliers may begin passing potential decreases through at this time. The outlook in 2007 is much better and a decrease in wholesale prices is widely predicted. The first supplier to decrease its prices is likely to provide a signal for others to follow, but by how much and when will be a big talking point closer to the time. Energy suppliers may be guilty of passing through price rises at the height of the market in 2006, but with an uncertain winter it may prove to be a wise decision. When SSE does increase prices in early 2007, the company could be facing some unwelcome criticism by lagging behind other suppliers and increasing prices while its rivals will be more focused on potential reductions. 29.9.06