Utilities firms haven’t cut prices as much as they should this year, and now bills could be heading up again.

Energy bills could rise by 10% over the next six months, even though firms have failed to pass on all of last year’s fall in fuel prices.

Cold winters always contribute to higher energy bills for homes and businesses

Consumer groups have warned that big utility firms are privately saying there will be no more cuts this year, and bills could even rise based on Met Office predictions that this winter will be colder than last, although still relatively mild.

Households are already being overcharged by more than £1 billion because energy firms have refused to pass on the full benefits of wholesale price falls.

Since the winter of 2005-6, wholesale prices have plummeted more than 50% for gas and 30% for electricity, which should translate to about a 30% fall in household bills for gas, and 8% for electricity.

However, so far gas bills have gone down by an average of just 12.3%, while electricity costs have fallen by 3.8%.

Comparison firm uSwitch said suppliers are withholding about £177 in price cuts for every household in Britain.

Scottish & Southern Energy (SSE), which serves about 8m customers, is the only firm to have passed on a net increase in electricity costs this year, up 3.9%. It has also cut gas prices the least this year, with a paltry 1.3% drop in bills.

The supplier argues it is one of the cheapest providers of energy and started from a lower base than other providers, so did not need to pass on such large cuts. It said: “Our prices are consistently low and we aim to protect customers from wholesale price volatility.”

French-owned EDF Energy cut gas rates by only 10.2% this year while electricity prices have not been cut. This contrasts with its 36% increase in gas bills and 13% hike in electricity tariffs in 2006.  EDF pointed out that its electricity price increase last year was the lowest among the “big six suppliers”. Scottish Power, which had the second-lowest rise, increased electricity bills by 19% in 2006.

The biggest cuts were made by British Gas, which reduced rates by 19.5% for gas and 16.3% for electricity – although as it charged the most for energy last year there was more scope for it to reduce prices. It increased gas tariffs by 37% in 2006 and electricity prices by 33%. Despite these cuts, Centrica, its parent company, was able to announce a £533m operating profit in the first six months of this year.

Ann Robinson at uSwitch, said: “Predictions that wholesale prices could be on the rise again, based on run-of-the-mill seasonal variations, are the ‘get out of jail’ card suppliers are waiting for.”

She said the best way to get a better deal is to switch suppliers. She said you could save up to £200 a year with a dual-fuel online tariff. The best such deal is British Gas’s Click Energy 3 plan, at an average of £755 a year. This is based on a medium user paying by direct debit, though costs will vary around Britain.

The soaring oil price will also force energy firms to react. The price of Brent crude has leapt from $60.25 a barrel in January to $79.02.

Not all commentators are convinced prices will go up. Patrick Heren, who produces the respected Heren report, said the opening of gas pipelines from Norway and the Netherlands is likely to reduce wholesale prices in the long term. He added that the Qatargas 2 project is planned for completion next year, allowing liquefied natural gas to be delivered to South Hook, southwest Wales.

“These developments are likely to put pressure on suppliers to cut retail prices,” he said. However, Alistair Buchanan, chief executive of the energy regulator Ofgem, warned last week: “Nobody can predict with any certainty how severe a winter we may have.”

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Sources: http://business.timesonline.co.uk/

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