Consultants question legitimacy of consumer price rises

A risk analyst from specialist energy firm Utilyx has questioned the fairness of energy companies raising prices for consumers when wholesale prices that they purchase are considerably lower than they […]

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By Tom Gibson

A risk analyst from specialist energy firm Utilyx has questioned the fairness of energy companies raising prices for consumers when wholesale prices that they purchase are considerably lower than they have been over the last few months.

Last week E.ON joined three other companies by raising their domestic energy prices, but many in the industry are arguing that prices should in fact reflect the wholesale costs that they are purchased at.

Andrew Horstead, risk analyst at energy and carbon specialist Utilyx said: “Although the events in Japan, unrest in the Middle East and Germany’s decision to exit nuclear created a perfect storm for wholesale prices to lift, throughout April and May we actually saw these prices plateau. This trend has generally continued since, with gas prices decreasing by 15% since mid-June.”
On Friday, wholesale gas prices dropped to their lowest point of the year, at 49.9p per therm. Many have called for the sector to be referred to the Competition Commission from Consumer Focus and others amid allegations of unfair rises.

Mr Horstead said domestic rises wouldn’t wash if wholesale prices were dropping: “If the economists are correct and this trend continues over the next six months then price reductions are the logical consequence and the suppliers will have to look at reducing costs for consumer.”