Thursday, 23 August 2012

Psst...Want to buy some cheap energy?

I'm sure we’ve all been offered “dodgy” goods at some time in our lives? They can range from counterfeit designer goods, to “spare” tarmac from motorway maintenance which can transform your driveway. 
I can only assume that Del Boy inspired deals are available for the purchasing directors at energy companies, as price announcements by two energy companies this week have delivered confusing messages about wholesale energy costs.


Company 1: The bad news….. 

Energy firm SSE, which trades as Scottish Hydro, Swalec and Southern Electric, will increase its domestic gas and electricity prices by an average of 9% from 15 October. It blamed the increases on the extra cost of using the gas and electricity networks and rising costs in energy wholesale markets. Some 3.4 million gas and five million electricity customers will be affected.

The company's chief executive Ian Marchant, said “the forthcoming increases were regrettable but unavoidable.” 
In May 2012, the company reported a 2% rise in annual pre-tax profits to £1.33bn. If I was Mr Marchant I would want to have a pointed discussion with my purchasing team, based on the comments from their competitor for raw materials. 

Company 2: The good news (but only if you live in Northern Ireland.)

Power NI has announced a 14% cut in electricity prices for Northern Ireland customers. The reduction becomes effective in October 2012. 

Stephen McCully, the managing director of Power NI, said prices should remain the same for 12 months. He said the driver around the reduction this year was gas and coal prices. "The cost of generation makes up about 65% of the customers bill. What we have seen over the last number of months is an easing in gas prices and also coal prices

Mr McCully must have been delighted with his purchasing team. However, he’s still got something up his sleeve as most of the cost of electricity comes from generation and generation prices were down by 17%. 

So. Northern Ireland has had more than their fair share of troubles over the years, but the future looks brighter than in mainland UK.The price reduction means Power NI will be cheaper than the UK average from October.  

Could it be the competitive market forcing this price reduction? 

Not really.Power NI supplies 84% of homes in Northern Ireland and about half of all businesses.

Could it be the UK's Big 6 energy companies are greedy "b*****rs"? 

You might think so, I couldn't possibly say......




Icarus 

Twitter: (@solaricarus)

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