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U.K. Utilities May Speed Price Hikes, Slow Cuts, Citigroup Says
2010-10-01 13:11:04.223 GMT
By Mathew Carr
Oct. 1 (Bloomberg) -- U.K. utilities may accelerate price
hikes under a proposed rule that they give customers notice
before raising energy bills, said an analyst at Citigroup Inc.
Ofgem, Britain's energy regulator, said yesterday energy
suppliers should give 30 days' notice before any price rises are
made to "help consumers work out whether they are getting a
good deal," the regulator said in a statement on its website.
"They will likely raise prices earlier and by higher
amounts than would otherwise be the case, and wait longer to
lower prices," said Peter Atherton, an analyst for the bank in
London. "Also, this requirement will likely work against new
entrants, who rely even more on the ability to price flexibly,"
Atherton said today in an e-mailed research note.
The plan is part of Ofgem's drive to improve competition
after its probe into energy markets in 2008. Utilities have 65
days after raising prices to inform customers under current
rules, Ofgem said. The new plan could start by January 2011,
unless suppliers reject the change.
"The best result for consumers will be if energy companies
don't block the changes that Ofgem proposes," Chris Huhne, U.K.
secretary of state for energy and climate change, said
yesterday. "If they do, I won't hesitate to use my powers to
end for good the practice of surprise energy-bill hikes."
For Related News and Information:
Top Energy Stories: ETOP<GO>
U.K. Power Prices: ELEU<GO>
--With assistance from Catherine Airlie in London. Editors: Alex
Devine, Mike Anderson.
To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
