Scottish & Southern Energy PLC is to cut its average annual gas bills by 12 pct to 534 stg, the company said this morning.  The cut, which will start from tomorrow (1 March), will be joined one month later on 1 April by a 5 pct cut in the average yearly electricity bill to 355 stg.  The dual fuel rate will therefore be on average 873 stg, a 9 pct cut.  SSE says that the price cut makes them the UK’s cheapest supplier of energy, citing the 873 stg dual fuel bill as 4.6 pct cheaper than E.ON AG’s Powergen and 9.1 pct cheaper than Centrica PLC’s British Gas brand.  It says it will waive any termination fees which may apply to any of its customers who are on its fixed price tariffs to enable them to take advantage of the new tariff without any penalty.  SSE supplies energy as Southern Electric, SWALEC, Scottish Hydro Electric and Atlantic and is the UK’s third largest supplier of energy, and has 7.5 mln customers.  Alistair Phillips-Davies, Energy Supply Director of SSE, said: ‘While wholesale energy prices were rising in recent years, we protected our customers from the worst impacts of the increases, with the result that we have been the UK’s cheapest supplier of energy for most of that period.'’Since last September, we have made clear our intention to cut gas and electricity prices if there was a sustained fall in wholesale prices which would allow us to do so, and so I am very pleased that we have now been able to make this announcement. It means we are able to start cutting prices immediately.’

UK gas prices are unlikely to slide further in coming months, as some analysts forecast, because importers will probably reduce supplies over the summer, Lehman Brothers said on Wednesday.  A week after analysts at Merrill Lynch slashed their UK gas price forecast for this year from 42 pence per therm to 25 pence, citing low demand and oversupply, rival U.S. investment bank Lehman is less bearish.  “Although there is clearly some downside risk to our UK natural gas price forecast of 40p/therm for 2007, we do not forecast a complete collapse in prices in the coming months as we believe current and planned import capacity is flexible enough to partly mitigate severe oversupply,” it said in a research note.  Merrill Lynch said last week that large amounts of gas still in storage, after one of the warmest winters on record, should keep downward pressure on UK gas prices throughout spring and into summer.  Summer demand is usually supported by shippers buying on the spot market to stash away cheap gas for the next winter.  So some traders and analysts expect UK gas prices to continue to fall through summer as low demand for storage, combined with continuing large imports, floods the market.  But Lehman expects Norwegian producers, which have been largely responsible for the huge flows of gas into the UK since last autumn, could delay production until next winter when they can reasonably expect to get more for their gas.  Meanwhile, forward gas contracts will remain linked to oil, where prices are likely to be supported by falling production, Lehman said.  “A takeaway from the outlook statements accompanying the oil company year-end results we have seen so far has been the managing down of company production targets and accelerating decline rates,” the research note reads.  “We continue to believe that the oil market remains tight and these factors should be supportive to the oil price going forward.”

UK gas prices at the National Balancing Point drifted lower Wednesday as a well-supplied system put some pressure on the prompt, although curve prices were still offering some support to the near-term contracts, traders said.  Within-day was down to 17.75 p/therm by midday GMT, down from 18.5 p/th Tuesday, while day-ahead was at 17.95 p/th, down from 18.6 p/th.  National Grid data showed demand bang on seasonal norms at 1100 GMT, at 335 million cubic meters/day, and system length at 7.9 million cu m. “We’re well-supplied but the curve is still holding the prompt up a little,” said one trader. “It’s not going to drop massively.”  March was trading at 18.35 p/th at lunchtime, down from 18.8 p/th on the previous day, and still below the summer months. April was at 18.5 p/th and
May at 18.7 p/th. Several traders have said they are suprised at the summer premium over the front month. “Everything happening on the prompt is persuading me that the summer should be coming off, but obviously someone else thinks differently,” said one trader.  On the far curve, trading was sparse and contracts drifted without any solid direction. “It’s deathly quiet,” said one trader. “The movement’s all pretty irrational at the moment. I think people would like it to come off again, but are too scared to get involved.”  Winter 07 did trade down, reaching 40.75 p/th during the morning before firming to 41.2 p/th by lunchtime, compared with Tuesday’s close of 41.95 p/th. Winter 08 was also off, to 41.25 p/th from 42.1 p/th Tuesday, while summer 08 moved sideways to 29.4 p/th.

Contact us directly on 0870 710 7560 or click here to enter your details to arrange a call back or click here for further detailed information on our business gas procurement services.

Today, the Energy Saving Trust announced the first independent UK wide assessment of household wind turbines. The Energy Saving Trust helps consumers save money, reduce their energy consumption and reduce carbon dioxide emissions. The assessment will help consumers to make informed choices when considering a wind turbine for their home. The target is to monitor one hundred household wind turbines. The assessment will take into account a number of factors including the local wind resource, where they are installed on the house and the impact of nearby buildings and trees on the performance of the turbine.  The trials will also take into account the impact the wind turbine has had on the householder’s energy bill, as well as other factors such as their experience when buying it and what impact it’s had on their daily life.  There is the potential that household wind turbines could supply 4 per cent of the UK’s electricity and reduce carbon emissions by 6 per cent. To achieve this, the consumer needs to know what will work most effectively for them. Large scale wind turbines are a proven technology, and although household wind turbines are now available on the high street, they are still very much a developing technology.  Philip Sellwood, Chief Executive of the Energy Saving Trust, said: “To date there is no independent, real life assessment of wind turbines installed on homes. Consumers need to know how much electricity they can expect to generate from a wind turbine, how much money it will save them, and how much it can reduce their carbon footprint.”   “The experience of other wind turbine owners will also be of tremendous benefit in helping potential new owners to decide whether a wind turbine is right for them.”  The project is joint funded by the Energy Saving Trust’s partners: B&Q, British Gas, EDF Energy, E.ON UK (Powergen), Northern Ireland Electricity, RWE (npower), Scottish & Southern Energy, and ScottishPower. Installation of the monitoring equipment is scheduled to take place between now and June 2007. The trial is scheduled to run for 12 months, with results in Autumn 2008.

Scottish & Southern Energy (SSE) has cut the price of its gas and electricity for 7.5 million customers.  From the 1st March gas prices will fall by 12%, cutting the average annual bill by £72 to £534.  In addition, from the 1st April electricity prices will fall by 5%, cutting the average annual bill by £18 to £335.  SSE is the latest energy firm to lower prices. The cuts come after an increase in the supply of gas, thanks to imports from the Netherlands and Norway. Wholesale gas prices have fallen by about 50% over the past six months. On Tuesday, Powergen said its gas bills would fall by 16% and its electricity bills by 5% from the end of April.  British Gas and Npower have also said they are cutting prices. Only two of the big six UK energy suppliers EDF Energy and ScottishPower have yet to announce a price cut.

British Gas, Npower and now Powergen have already announced lower tariffs in response to falling wholesale gas prices.  As wholesale gas prices have fallen by about 50% over the past six months.  Three of the Big Six have now announced price reductions and the others must follow.  Scottish & Southern Energy, with about seven million customers, has also said it will cut its tariffs soon to keep its prices lower than those of British Gas. We widely expect with this recent announcement that Scottish & Southern Energy the UK’s third largest energy supplier and the UK’s number one renewable supplier, will announce its reductions within days.  But this is likely to prompt swift retaliation from British Gas who are keen to remain the cheapest UK energy supplier in order to regain the one million customers lost last year.

Powergen has become the third big energy supplier to announce price cuts for its gas and electricity customers since the beginning of February. From 30 April, its gas bills will fall by 16% and its electricity bills by 5%. Powergen’s announcement will benefit six million domestic customers, with those on “dual fuel” contracts saving on average £92 a year. British Gas and Npower have already announced lower tariffs in response to falling wholesale gas prices. Wholesale gas prices have fallen by about 50% over the past six months. Powergen’s managing director Nick Horler said: “We’ve been very aware of the concerns of our customers over rising energy costs in recent years and now the wholesale market appears more stable, we’re pleased to be able to reduce our prices.”  Adam Scorer of the watchdog Energywatch gave this latest price cut only a lukewarm welcome. “Three of the Big Six have now announced price reductions and the others must follow,” he said. “As prices come down we are concerned that consumers looking to switch for a better deal may be in for a confusing time with new products and complex terms and conditions emerging as companies jockey for position.”  Scottish & Southern Energy, with about seven million customers, has also said it will cut its tariffs soon to keep its prices lower than those of British Gas.  But so far it has not yet said by how much, or when the price cuts will come into effect.  British Gas, which still has half the UK’s domestic customers, will cut its tariffs next month. Its gas prices will fall by 17% and electricity prices by 11%, cutting its average dual fuel bill by £167 to £953. But Mark Todd of Energyhelpline.com predicted that the company may cut its prices further.  “This is likely to prompt swift retaliation from British Gas who are keen to remain the cheapest UK energy supplier in order to regain the one million customers lost last year,” he said.

E.ON UK said Tuesday it was cutting its retail gas prices for its UK Powergen customers by 16% and its retail electricity prices by 5%, effective from April 30th, 2007. The move is a response to recently announced price cuts by Centrica’s British Gas subsidiary and RWE-Npower.  E.ON UK said that Powergen would be cheaper than British Gas when the new prices become effective. In an early response to British Gas’s price cuts, E.ON UK had earlier launched some new tariffs available on demand offering reduced prices for its customers. But E.ON UK did not initially cut its standard tariffs.  The level of British Gas’s price cuts is believed to have taken some of that company’s rivals by surprise, so it has taken them time to catch up. EDF Energy, Scottish Power and Scottish and Southern Energy, the other three of the big six retailers have not yet announced price cuts, although SSE has said it will “blow British Gas out of the water” when it does.  Customers on Powergen’s Age Concern tariff and StayWarm scheme for the over-60s will also see the impact of this decrease.

High taxes and falling prices will force the UK’s £9bn gas industry to cancel projects and scale back its operations in the North Sea, an industry leader has warned. Mike Simpson, the UK business manager of Tullow Oil, said gas companies dealing with low prices were suffering because they had to pay the same 50% corporation tax rate as oil producers.  Simpson revealed that Tullow planned to cancel a production programme in one of its North Sea fields because it had become uneconomic.   He said: “There is going to be a crunch in the gas business soon. The door will shut quite dramatically. It has already started - companies are pulling rigs out of the market.”  He also warned that failure to ease the tax burden on gas could lead to hundreds of millions of pounds worth of the fuel being left below the North Sea. 

Higher U.S. natural gas prices should help attract LNG cargos that would otherwise land this summer in the United Kingdom, which has seen its prices decrease almost 70% since November, according to some analysts.