EDF undercuts rival UK energy suppliers with 3.9 percent price rise

LONDON Tue Nov 12, 2013 12:31pm GMT

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LONDON (Reuters) - EDF Energy said it would raise gas and electricity prices for British households by 3.9 percent, less than half the size of increases announced by four of its competitors amid political pressure on suppliers to keep bills down.

The issue of rising energy bills has dominated the political agenda since September when opposition Labour leader Ed Miliband promised to freeze energy bills for 20 months if he wins power in a 2015 election.

Four of Britain's "big six" energy suppliers including Centrica and SSE have over the last month raised their charges by an average of 9.1 percent, more than four times the UK's current 2.2 percent rate of inflation.

EDF attributed its lower price hike to the holding back of rising costs from a government social and environmental policy, ECO, pre-empting a government promise over reductions.

"The company has taken action ahead of the outcome of the government's review of the costs of ECO and other schemes," EDF, which in October signed a 16 billion pound ($25.90 billion) deal with the government to build the country's first new nuclear power station for over 20 years, said in a statement on Tuesday.

The company's price rise is due to come in from January 3.

British Prime Minister David Cameron sought to regain the initiative in the political battle over soaring bills last month by promising to cut some of the green taxes that the companies have said have inflated prices.

"If the government makes bigger changes to the costs of its social and environmental schemes than EDF Energy has anticipated, the company pledges to pass these savings onto customers," the company added, cautioning that if the changes are less than expected it may review its prices again.

Comparison website uSwitch said EDF's move to factor in the government's promise to reduce the "hidden" green levies from bills would encourage it to "put its money where its mouth is and make good its pledges on affordability".

Energy prices in Britain have already risen by 24 percent over the last four years, according to regulator Ofgem, ramping up pressure on household finances at a time of wage stagnation.

CHANGE NEEDED

UK energy minister Ed Davey will warn utilities in a speech at an industry conference on Tuesday that change is needed.

"Customers are not just cash cows to be squeezed in the pursuit of a higher return for shareholders," he will say, adding that for consumers, utilities' greed is comparable to that which "consumed the banks".

The government has already promised to review competition in the market which is 99 percent controlled by the big six.

Britain's energy regulator Ofgem, due to report initial findings on competition by the end of March, said other suppliers should now compete with EDF's lower price hike.

"...if EDF can do it (absorb some of the price rise) why can't the others; they probably can, and in a competitive environment you would hope that companies would do their best to try to win the business of consumers," Ofgem's interim chief executive Andrew Wright said at the Energy UK conference.

Davey will also call on the utilities to show consumers they are keeping costs as low as possible, pledging support for the regulator to help it force the companies to be more transparent.

The four UK suppliers which raised their prices, Centrica's British Gas unit, SSE, RWE's npower and Iberdrola's Scottish Power, blamed the move on the rise in the price of energy bought on wholesale markets, the cost of fulfilling government social and environmental schemes and of using and maintaining the network which delivers power to homes.

EDF said the rise in its wholesale energy costs would add just 0.1 percent to customer bills. In contrast, Centrica said its wholesale costs would add 3 percent to customer bills while SSE said they would add 4 percent.

"The big difference is that EDF aren't blaming energy prices. The others haven't been buying energy on the wholesale markets as effectively and efficiency as EDF," said Matt Osborne, an analyst at energy consultancy Inenco.

E.ON UK, the only one of Britain's big six suppliers yet to increase prices for this winter, on Tuesday declined to comment on whether it was rising prices.

(Additional reporting by Karolin Schaps, Sarah McFarlane and Nina Chestney; Editing by Paul Sandle and David Evans)

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Comments (2)
justsojones wrote:
I have a simple solution for you, the government introduced the Feed-In-Tariff system back in April 2010 by installing solar panels,however this only applies to homeowners,if you where to apply this to all the council houses with a south facing roof these energy company’s would be the local council in no time.Theres nothing to stop your local council from DOING THIS.

Nov 12, 2013 3:37pm GMT  --  Report as abuse
Bilboburgler wrote:
Given how little control these companies are now claiming to have over their costs, why are the Directors paid so much?

Nov 13, 2013 9:36am GMT  --  Report as abuse
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