UK energy suppliers say it's too early to cut UK retail bills:
UK energy suppliers say that it is too early to cut household UK gas and power bills, after reports of recent falls in wholesale prices led to politicians and trade unions to call on the companies to slash their tariffs. Centrica spokesman Andrew Hanson said that there was "optimism" for the UK based on new gas supply pipelines such as Langeled coming onstream in coming months. But he said this had to be matched by "realism". Oil prices were still high and forward gas prices, although lower than a few months ago, were still high compared to past years. "There are still uncertainties out there," he said. E.ON UK spokesman Jonathan Smith said that an "extended period of falling prices" was needed before mass market prices could be reduced. The market had not entered winter yet and if there were an unexpected event such as a fire at Rough then prices could spike back up again. "It's heartening to see wholesale prices fall but far too early to cut retail prices," he said. Although new gas supplies are expected this winter, E.ON UK is also stocking up on alternative fuels for its power plants such as coal and distillate. It would be "crazy not to do that," the spokesman said. The winter 06 wholesale gas price has dropped 26% from 89p/th on April 3 to 66p/th on September 11. The winter 06 wholesale power price has dropped 25% from £72/MWh on April 3 to £54/MWh on September 11. Early April was the highest point of the year. But even as the wholesale market has been falling, suppliers have continued to increase their retail tariffs, with RWE-Npower raising their prices, for example, by 17.2% for gas and 9.9% for power announced last week and effective from October. Suppliers say that their changes to retail prices often lag behind changes in the wholesale market, both on the way up and down. The Liberal Democrats have called for lower retail bills in response to the falling wholesale market. "People will expect their gas and electricity bills to fall as quickly as they were increased by these companies," said Liberal Democrat Shadow Trade and Industry Secretary Edward Davey in a statement. The GMB trade union's Gary Smith meanwhile said that it wanted suppliers to pass on the fall in wholesale prices. "GMB, as the largest union in the energy industry, now call on the gas and electricity suppliers to cut their prices and pass on this drop in wholesale prices to their consumers," he said in a statement. Consumer experts who watch the market closely have acknowledged that while wholesale gas and power prices have been falling in recent months and while a fall in retail prices would be welcome, wholesale prices are not low in historical comparison. Energywatch CEO Allan Asher told Platts in an interview in August that the forward curve "has dipped, but only to where it was last December, so it is hardly a source of rejoicing the incredible price ramps we have seen are still firmly embedded," he said. An annual gas supply contract in the UK, meaning winter and summer, has dropped from 68p/th to 56p/th in recent weeks, but is still far above the 20p/th price common during 2000 to 2003. 13.9.06