January 11, 2012 at 14:38 PM EST
Gas Bill Price Cuts
After nearly a year of gas and electric price increases, a British company has announced a price decrease that is pressuring its competitors.

British citizens have watched their gas and electric prices steadily rise with the wholesale costs this past year.

Just two months ago, customers of EDF Energy were outraged as gas prices increased 15.4% and electricity went up 4.5%.

But EDF is trying to rectify this.  Though it will by no means cancel out the price increase, the British company is at least reversing the upward trend by announcing a 5% cut in gas bill prices, starting February 7.

EDF Energy is one of the Big Six—Britain’s major energy companies also including RWE npower, Eon (PINK: EONGY), Scottish Power, Centrica (LON: CNA), and SSE (LON: SSE).

AND EDF’s announcement has put pressure on the other five members.

Since wholesale gas prices have been falling, in part due to the unusually warm winter, EDF has moved to try to appease customers by lowering the prices.  If the other companies don’t soon do the same, they run the risk of losing customers.

Chris Huhne, the energy secretary, emphasized this to the Financial Times:

“If suppliers do not reduce prices, consumers can send them a clear message by voting with their feet and taking their business elsewhere.”

But Andrew Horstead of Utilyx mentioned that the cuts are more symbolic than anything.  The price cut extended by EDF is going to be tough on the company.

Much of the recent price increase has been due to domestic tariffs, put in place to push up inflation in the Bank of England.

But this 5% cut puts inflation at risk of falling.  Alan Clarke of Scotia Capital expressed concern that inflation would drop if other energy companies also implemented price cuts.

Clarke remains confident, however, that this won’t be the case.

And none of the other Big Six companies have indicated plans to decrease prices yet.  But with the pressure the EDF price cut has created, the final result remains to be seen.

That’s all for now,

Brianna



Gas Bill Price Cuts originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.
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