British Gas, the UK’s largest energy company, has mounted immense pressure on its competitors to reduce prices after announced its second cutback in bills in six weeks. The Centrica-owned business has said that electricity prices would fall by 6 percent and gas by 3 per cent with immediate effect, making it the cheapest dual-fuel supplier in the UK. Competitor suppliers will now be under extreme pressure to follow suit, particularly EDF Energy and Scottish Power. They are the only two suppliers out of Britain’s ‘Big Six’ which have intractably declined to slash their prices.
Critics said it was shocking that the cash-rich giants, both now in foreign ownership, have failed to pass on huge savings in the cost of wholesale gas to their 10 million customers. Scottish Power’s operating profits were recorded at £805 million in the last financial year. The company was recently sold out to Spain’s Iberdrola in a £11.6 billion deal. At the same time, EDF witnesses its profits rise to £856 million last year, while profits at its French parent company topped £9.4 billion.
Watchdogs have recently rapped the two companies for lagging behind on price reduction. However, Scottish Power spokesman has signaled that it was finally about to bow to pressure and reduce bills. He said, ‘Customers can expect good news soon.’ In the meanwhile, it also surfaced that EDF has been trying to sign up new customers with big concessions of 12 per cent off gas and 6 per cent off electricity. However the proposal that has fixed prices until October next year is not being promoted to existing customers.
Over the past few years, the UK’s leading energy suppliers have faced unexpected increases in wholesale energy costs. Without a doubt, between the winter of the year 2002 and 2003 and last winter, the cost of wholesale gas nearly quadrupled. The UK which once was the largest exporter of gas has now been reduced to a net importer. However, recent supply pressures have been significantly lessened by a massive gas pipeline from Norway coming onstream. Following this, wholesale prices have taken a downward trend, which eventually led to price cuts for domestic customers in February and March.
Between 2002 and February this year, British Gas had increased its electricity charges almost six times, and gas prices seven times, as it passed on the then rising wholesale prices to customers. The British Gas announcement of cutting the rates comes a week after the firm was condemned for an increase in customer complaints, following the introduction of a new billing system.
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