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Energylinx UK Energy Industry News Service

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May 10, 2005

British Gas considers gas price hikes

Centrica, parent to British Gas, announced yesterday at their AGM that gas prices may have to be increased again. Sir Roy Gardner, Chief Executive, announced that whilst their financial performance was good in the first quarter of 2005 that looking forward they still see further volatility in the gas curve.

Gardner believes that wholesale prices are running some 25% higher than at the time of their earlier 2004 results announcement. As a result, his view is that an appropriate retail price increase may yet have to be taken during 2005 to protect their gross margin.

Energylinx has updated the analysis of British Gas residential results originally carried out in December 2004, when interim results for British Gas were available to June 2004.

Again it is notable that even while British Gas continues to lose residential customers that it’s operating profit for the energy segment of their business has increased from £136 million in the year to December 2003 to £249 million in the year to December 2004.

From this it would appear that the profit from the million customers who left British Gas in this period has been replaced by an increased operating profit per customer of 94% in the same period.

In the first four months of 2005 British Gas has lost a further 382,000 energy accounts, it will be interesting to see the interim results at the end of June to understand whether again the remaining customers will fill the potential profit gap.

Since September 2004 British Gas have been attracting customers to their capped price energy product where an additional fee on top of the existing cost allows the domestic customer to cap their energy prices until July 2007. Conceptually this sounds like a good offer for the consumer until you consider that its means that an average domestic** consumer is paying over 14% more than they need to should they have changed to the least cost supplier for their home.

British Gas Analysis Dec-04 Dec-03 Dec-02 Dec-01
Customer numbers (period end) (000s):         
  Residential gas 11,771 12,590 12,839 13,451
  Residential electricity 5,950 6,189 5,795 5,374
Total 17,721 18,779 18,634 18,825
Operating profit (£m):        
  Residential gas        
  Residential electricity        
Total 249 136 218 19
Operating profit per customer (£s):        
  Residential gas & electricity 14.05 7.24 11.70 1.01

Our advice for anyone considering moving energy supplier to British Gas is that they first compare the prices of all gas suppliers available to their home. Standard British Gas gas customers would also financially benefit from comparing prices. Unfortunately, customers who have already transferred to the British Gas capped price product would be advised to consider any move carefully as British Gas will charge a hefty penalty for departing capped price customers.

Gas Price Comparison

Dual Fuel Price Comparison

Electricity Price Comparison

These Energylinx calculators are unique in that they allow you to compare the prices of all energy suppliers.

Energylinx will arrange the whole transfer process for you, including notifying your existing supplier of any planned change and tracking the transfer to ensure that it occurs on time and accurately. Energylinx provides its services completely free of charge to the domestic consumer.

Posted by energylinx at 12:44 AM Technorati:

May 06, 2005

Gas Distribution Charges set to increase

Transco has published its indicative charges for gas distribution networks.

Under the terms of Transco's Gas Transporter licence they must provide OFGEM with notice of any proposal to alter their charges at least 150 days before the proposed implementation date.

Worst effected by this proposed change will be gas consumers served by the London Distribution Network where the increase is proposed at 11.5%.

The is followed closely by the North Distribution Network where the increase is proposed at 8.5%.

OFGEM are seeking views to these changes before the 3rd June 2005. Responses can be sent to:

Samanta Padalino
Head of Gas Distribution Policy
OFGEM
9 Millbank
London
SW1 3GE

or emailed to samanta.padalino@ofgem.gov.uk

The following table shows the proposed changes for the the year 2005-2006 along with a forecast for the year 2006-2007.

Indicative Changes to Gas Distribution Charges over the next two years
Distribution Network October 2005 % change October 2006 % change
East 9.4 -4 to -1
London 11.5 -2 to 1
North West -4.8 8 to 11
West Midlands 1.9 4 to 7
North   8.5 -4 to -1
Scotland 1.1 -4 to -1
South 4 -1 to 2
Wales and West 2.2 3 to 6
National Weighted average 4.6  
Source: www.energylinx.co.uk

Transco have to use reasonable endeavours not to make changes to charges more frequently than once a year and for such change to take place from 1 October.

At this stage no gas supplier has advised of any price increase in the cost of purchasing gas from them, in the meantime however Energylinx would encourage gas consumers to compare prices of their gas supplies to ensure that they have the best deal available to them.

Gas Price Comparison

Dual Fuel Price Comparison

Electricity Price Comparison

These Energylinx calculators are unique in that they allow you to compare the prices of all energy suppliers.

Energylinx will arrange the whole transfer process for you, including notifying your existing supplier of any planned change and tracking the transfer to ensure that it occurs on time and accurately. Energylinx provides its services completely free of charge to the domestic consumer.

Posted by energylinx at 11:49 AM Technorati: