Energy firms set to push prices up again

Published on Friday 8 August 2008 10:26

CONSUMERS are being warned to brace themselves for another punishing round of price increases by energy companies.

Scottish Power is expected to announce a 'double-digit' price rise for its 5.2 million gas and electricity customers in the coming days, while E.ON and Scottish and Southern Energy are also thought to be preparing further rises.

The rises are expected despite a recent fall in the wholesale price of gas, and will be difficult to bear for many families already struggling to cope with rising costs.

It comes as Government consumer champion Ed Mayo said British households were having their "pockets picked" by foreign energy firms who were using the profits to subsidise customers in their own country.

Mr Mayo said a lack of competition in the energy markets meant millions of British families were being ripped off.

More than 11 million UK households have their power supplied by foreign-owned companies, and Mr Mayo said the consumers were suffering because these companies faced no competition back home.

"Closed and protectionist European markets end up picking the pockets of consumers in this country," he said. "Prices are the opposite of gravity – they go up, but they are much slower to come down."

The price of gas for delivery the following day has dropped 32 per cent over the past month, from 69p per therm in early July to around 47p in recent days.

These decreases have come at the same time as a near-20 per cent drop in the price of crude oil, down from a high of $147 a barrel in July to around $118 currently.

EDF was the first of the leading energy companies to announce a price increase for its five million UK customers, hiking its prices 22 per cent from gas and 17 per cent for electricity a fortnight ago.

It was followed by Scottish Gas owner Centrica, which sparked an outcry when it raised prices for some gas customers by as much as 44 per cent.

A spokeswoman for consumer group Energywatch said: "The market in the UK is broken and we consider it an absolute imperative that the government asks the competition authorities to explore every avenue to return some sanity to the prices."