Leading energy supplier Scottish & Southern (SSE) is going to cut gas and electricity bills for its customers but has not decided by how much. It has written to seven million people telling them their charges will be reduced in the next few months. The impending cut has been prompted by a fall in wholesale gas prices which have been dropping since last summer. “We do believe we are seeing a sustained fall in wholesale prices” said a spokesman. SSE, which trades as Southern Electric, SWALEC, Scottish Hydro Electric, and Atlantic Electric & Gas, last raised its prices earlier this month. Its electricity prices went up by 9.4% and its gas prices by 12.2%. That was after two other increases in 2006. If the reduction goes ahead, it will be the company’s first price cut for six years. “We are working through the details, but we are going to give the customers reassurance” said the spokesman. Last year British Gas, still the largest energy supplier in the UK, said it would cut prices sometime this spring, once it was sure the fall in wholesale prices would be sustained. Paul Green, from online switching service Energyhelpline.com, said: “I’ve been speaking to all the other suppliers everyone else is waiting to see what British Gas does.” Mr Green predicts that British Gas will announce its price cuts when it publishes its interim profits on 22 February. And that, in turn, will see a flurry of announcements from other energy suppliers in the last week of February and the first week of March. They won’t make a firm commitment until they see the size of BG’s cuts so they can still try to undercut them,” he said. On Tuesday Npower announced a price cut of 6% – but only for new customers who sign up for one of its online tariffs. The regulator Ofgem has already issued a public warning to gas and electricity retailers that they will face official sanctions if they fail to pass on wholesale reductions to their customers.

Scottish & Southern Energy says it is to cut prices for the first time in six years. The group, which supplies energy as Southern Electric, Swalec, Scottish Hydro Electric and Atlantic Electric and Gas, expects to cut gas and electricity tariffs within the “next few months”. The firm currently has seven million domestic customers; it increased its prices at the start of January, when electricity bills rose by an average of 9.4% and gas by 12.2%. The move, announced in September, came about because of three years of sustained wholesale price hikes. “Since last September, we have made clear our intention to cut gas and electricity if there was a sustained fall in wholesale prices which would allow us to do so,” said director Alistair Phillips-Davies. “I am very pleased that we have now been able to confirm this. “We are now monitoring costs and evaluating how we will be able to pass savings on to customers.” Warm weather and increased imports from overseas have seen wholesale prices more than halve since the summer. British Gas owner Centrica recently pledged to cut prices in the spring after seeing nearly one million customers leave the firm in the wake of price rises last year.

Scottish and Southern Energy said on Wednesday it would cut gas and electricity prices for its 7 million customers, the first cut in six years. “We are now monitoring costs and evaluating how we will be able to pass savings on to customers,” said SSE’s energy supply director Alistair Phillips-Davies. “I hope we will see a sustained downward trend in the prices paid by our customers.” British Gas owner Centrica said in December it would cut household prices for gas and electricity this spring, in an attempt to keep customers after losing nearly a million last year. Comparison website Energyhelpline.com said energy suppliers were too slow in passing on the benefits of lower wholesale gas prices to customers, urging them to switch suppliers. “Wholesale prices have fallen by 50 percent over the six months and further falls of about 20 percent are expected this year, but so far no one from the energy companies has put an exact figure on how much they will cut prices by,” said Energyhelpline’s Paul Green.

Daily Mirror 31 January 2007:

Darren George faced a massive £2,000 increase in his gas bill each year until Your Money stepped in. We persuaded his energy supplier to cancel his contract and put him back on to a lower rate. The chip-shop owner from Sheffield was tricked into switching his gas supplier to a deal costing twice as much. Darren was called by “Ruby” from Energy Assure last year. She told him they could put him onto a much better gas deal. He asked her for details in writing but heard nothing until he received a shocking letter on January 15.

“It was an invoice from Elf Business Energy for gas at a rate of 4.2p per Kwh. My existing Powergen rate was only 2.03p per Kwh so I worked out the new deal would cost me around £2,000 extra,” stormed Darren. “I never gave them permission to switch me, they just went ahead and did so. I’m fuming.” When Darren contacted Elf to say he had been tricked into a four year deal with them, they told him that there was nothing they could do. They said he had agreed to a telephone contract which is binding.

But after Your Money intervened, Elf backed down and ripped up his contract. Andrew Hogg of Elf Business Energy said: “We recognise that the customer is unhappy and are working to restore the contract with his previous supplier.” Meanwhile, Nick Sandham of Powergen said: “We will ensure that Mr George is able to transfer back to Powergen as quickly as possible.” But Simon Howarth, boss of the switching company Energy Assure, denied that Darren had been tricked into changing suppliers. Darren disputes Energy Assure’s version of events. Howarth’s answer? “Sometimes customers suffer from memory loss.”

Stephen Alambritis of the Federation of Small Businesses said it was a common complaint. He warned Britain’s 4.2 million small businesses to be on their guard to avoid being tricked in the same way. “Rogue switching agents prey on the fact that small businesses have a busy workload,” he said. “They trick people into these telephone contracts.” Energy Assure’s Howarth said he had no sympathy with businesses which claimed to have been tricked on the phone because they were busy. “It’s the customer’s fault,” he told us.

He added that Energy Assure no longer sold gas or electricity and that Ruby, the salesperson who dealt with Darren George had since left the company. Elf blamed the problem on “miscommunication”. But Andrew Hogg added: “We provide our agents with clear guidelines on contract sales. Any departures from these guidelines are taken very seriously and we have taken this case up with the agent in question.” Tens of thousands of businesses are being targeted by rogue energy salespeople, according to Energywatch.

With small firms spending £2.3billion a year on energy it’s big business. The watchdog said that 125 businesses had complained about marketing tactics in the past six months but the figures were “just a small indication of a bigger picture.” Energywatch’s Karl Brookes warned: “Companies don’t have the same protection as consumers and Darren George’s case highlights the loopholes that some rogue agents will continue to exploit. The dodgy switchers use phrases such as “Shall we continue?” to trick small companies into agreeing a telephone contract. And before they know it, small firms have been switched to another energy supplier often with more expensive bills.

The scandal came to light following Your Money’s exposure last week of the dodgy tactics used by energy salespeople to sell contracts to home users. After we intervened NPower admitted persuading widow Jean Cox to ditch British Gas even though her power bill would have soared by a quarter. Now it’s clear that small businesses are even more likely to become victims as they have less legal protection than domestic users.

The problem is set to escalate, says Energywatch. As well as having no cooling-off period where firms are legally bound to a contract as soon as they agree, even if that is over the phone firms have to stay with suppliers for a minimum of a year. If they are tricked into a long-term contract like Darren George, they could be tied to an expensive deal for up to five years. Energywatch has linked with the Federation of Small Businesses to provide practical guidance to firms about energy matters, including how to handle sales calls from energy suppliers. Go to www.smallbusinessenergy.org.uk for information or for advice on switching, go to www.energywatch.org.uk or call 0845 906 0708.

US Electricity costs predicted to double in next 25 years, thats what a report to be released today says the cost of electricity could double by 2030. The Energy Supply Association (ESA) commissioned the research that found a 30 per cent cut in greenhouse gas emissions in the next 25 years would mean power would become twice as expensive. ESA chief executive Brad Page says it would cost between $35 billion and $75 billion. What you need to do is have the widest ranges of technologies available if you want to do it in a least cost manner,” he said. “For example, least cost will actually come about by having nuclear and advanced carbon capture and storage available. “Each time you remove one of these options you actually find that the cost of meeting these deep emission cuts goes up and in some cases very significantly.”

Centrica, the country’s largest energy supplier, has widened its search for gas to Norwegian waters, as Britain’s North Sea gas supplies dwindle, the company said on Tuesday. The Norwegian government has granted British Gas’ parent company operatorship of three gas exploration licenses and a smaller stake in another, at a time when UK gas output is in constant decline and Norwegian exports to Britain are on the up. “Participation in the Norwegian sector broadens our approach to securing future supplies for our British Gas customers,” Centrica Energy managing director Jake Ulrich said. “We are pleased with this award and now look forward to progressing future opportunities in Norway.” The licenses include two fields provisionally named after 1970s English glam rockers T-Rex and Marc Bolan. Centrica has been awarded 40 percent operatorship shares in Block 8/7 of the Northern North Sea, Block 6506/12 in the Norwegian Sea and Block6506/9 of the Norwegian Sea. It has also been granted a 30 percent share of Block 35/8 in the North Sea, the company said in a statement.

Ofgem, resposible for overseeing gas and electricity prices throughout the UK, has called for an end to the Renewables Obligation the government’s support mechanism for renewable power. Ofgem says that the system is unfair to the consumer, renewable power generators are receiving an over-generous subsidy under the Renewable Obligation (RO), while electricity customers can be landed with higher bills. The way the RO operates means that customers end up paying even if renewable generation doesn’t get built, for example, if projects are delayed by planning problems, which is frequently the case. The RO also fails to link the level of support to the price of electricity or the price of carbon emission allowances under the European Union Emissions Trading Scheme. So existing and future renewable generators will benefit, at customers’ expense, from much higher electricity prices. It says that the cost of saving one tonne of carbon dioxide under the RO is £184-£481 , compared to £12-70 under the EU Emissions Trading Scheme. Ofgem chief executive Alistair Buchanan said: “We think that a review of the scheme could provide more carbon reductions and promote renewable generation at a lower cost to customers, who are already facing higher energy bills.” But the British Wind Energy Association, who’s members are supported substantially by RO payments, has accused the regulator of forcing prices up by failing to prioritise work on the national electricity grid which would allow more renewable capacity to come on line. Maria McCaffery, BWEA chief executive, said: “The problem is not the Renewable Obligation mechanism, which is delivering many times the build rate ever achieved before. The fact that delivery is still not enough and ROC prices are a little high is partly because Ofgem themselves have failed to prioritise issues of grid reinforcement and access which have slowed the ability of the industry to deliver.” McCaffery added: “We all need to be very careful about jumping to conclusions at a time when we urgently need stability in the market place – both to enable delivery of wind energy projects which are required to meet the Government’s 10% renewable energy target by 2010, but crucially to maintain investor confidence in a UK market which now only represents 5% of the global wind energy industry.” Previously the RO has attracted criticism for failing to provide support to all technologies, as utilities have opted for wind power, because it is the cheapest renewable electricity source.