Utility Week

UTILITY Week 30th January 2015

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UTILITY WEEK | 30Th JanUarY - 5Th FEbrUarY 2015 | 21 Customers This week EDF Energy to cut gas tariff from February reduction of 1.3 per cent will come into effect sooner than price cuts by its competitors EDF Energy on Tuesday became the last of the big six energy companies to announce a gas tariff drop, but added that "its 1.3 per cent cut will take effect sooner than its rivals'". The cut will come into effect on 11 February, just days ahead of Npower's 5.1 per cent cut, which is set for 16 February, and weeks ahead of cuts from British Gas, Scottish Power and SSE. EDF Energy remains behind Eon in the price cut race, with the German-owned supplier becoming the first of the big six energy companies to cut its gas tariff, by 3.5 per cent, with immediate effect two weeks ago. Meanwhile SSE said it will cut its gas bills by 4.1 per cent from 30 April, almost two months aer its rivals will bring in similar reductions. EDF Energy said late Tuesday aernoon that although its cut is the lowest in percentage terms, the move means that EDF Energy's standard dual-fuel prices will be cheaper than those of all but one of the major suppliers. "The vast majority of gas that EDF Energy bought for its customers was purchased well in advance and at pre- viously higher prices. This, and the low standard prices already offered by EDF Energy, has limited the size of today's reduction," EDF Energy said in a statement. EDF Energy chief executive, Vincent de Rivaz, added, "If wholesale gas prices create cost reductions which allow further price cuts, these will be passed to custom- ers as soon as possible." JA Gas British Gas Business apologises for billing blunders British Gas Business has apolo- gised for the problems encoun- tered by a small number of its customers because of its new billing system. The "teething issues" affected only a small number of the 500,000 business customers that have been moved to the new system over the past 18 months. Business energy broker Blizzard Utilities said some of its customers on contracts with British Gas Business had not received a bill for over nine months. Also, the companies were not given access to their usage data for the period. "We've spoken to Blizzard Utilities to apologise for the dif- ficulties faced by some of their customers and agree how best to resolve these," a British Gas Business spokeswoman said. WaTEr Firms fear leaks and sewer flooding most Leakage levels and sewer flood- ing are the "pressing priorities" for the water industry, accord- ing to the Consumer Council for Water (CCWater). The water watchdog's Delving into water report reveals that the volume of water lost through leakage has risen since 2011/12 and the overall number of sewer flooding incidents "remains an area of significant concern". In 2013/14, 22 per cent of water put into the system was lost as a result of leakage. This is less than the volume lost four years ago but has been rising. CCWater's report also states that in 2013/14, the number of properties that suffered internal sewer flooding fell to 4,959, but CCWater attributes this to concentrated rainfall that meant properties were flooded for longer periods. EnErGY Small firms trump big six on service For the fourth year in a row, independent energy suppliers have "wiped the floor" with the big six on customer service, according to the Which? energy company satisfaction survey. Npower was rated the worst for complaint handling and cus- tomer service, scoring a meagre 35 per cent, followed by Scottish Power (41 per cent), EDF and British Gas (49 per cent). Eon and SSE scored 50 per cent. Spark Energy was the only small supplier to score as low as the big six, with 50 per cent. Ecotricity ranked highest with 84 per cent, followed by Good Energy (82 per cent), Ebico (81 per cent), Ovo Energy (80 per cent) and Utility Warehouse (76 per cent). EDF Energy is the last of the big six to cut prices I am the customer Peter Pharoah "Speed of response when the market turns is critical" Last year was the UK's warmest since Met Office records began in 1910, a fact that was reflected in falling forward prices, which are likely to remain on a downward trend in the first quarter of 2015. Lower demand means gas storage facilities remain in good shape to address colder weather – a similar pattern to last winter, when forward "risk premiums" were steadily eroded into the summer. The other key bearish influ- ence on energy costs is, of Fixed price buyers have more limited options, but power and gas are moving in concert, so one tactic would be to hedge by buying power soon on a short- term pass-through deal, leaving the gas contract open longer. Speed of response when the market turns will be critical. Every one is trying to judge the bottom of the market, so sup- pliers will be inundated with tenders when the time comes. Peter Pharoah, head of energy markets, ENER-G Procurement course, plummeting oil prices. In January, Brent crude oil traded at a six-year low, dropping to less than $50 a barrel. While wholesale power prices remain largely driven by the underlying gas price, new environmental levies are ramp- ing up under Electricity Market Reform and savings could easily be eroded by these charges, especially in forward periods. We believe the downward trend won't bottom out until winter ends and suggest that commercial customers with flex- ible contracts buy in a small per- centage of their 2015 exposure, but hold off the majority of their buying until the end of Q1.

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