A price war among the leading British energy suppliers heated up on Friday following the introduction of promised cuts in gas and electricity bills from Scottish Power and EDF Energy. But with rival British Gas already undercutting the new prices, is it a case of too little too late?
Scottish Power, owned by Iberdrola (other-otc: IBDRY - news - people )of Spain, is bringing into effect gas price reductions of up to 16.5% and electricity price cuts of up to 5.5%. EDF Energy, a subsidiary of Electricite de France (other-otc: ECIFF - news - people ), is only slashing gas bills by 10.2%; electricity prices remain the same.
The two suppliers announced the cuts on April 30, a week after energy regulator Ofgem told their customers that they were being overcharged relative to the market. "A big price gap has opened up leaving EDF Energy and Scottish Power customers paying over £100 for remaining loyal," said Ofgem Chief Executive Alistair Buchanan, referring to annual charges.
Consumers are benefiting from natural gas being piped in from abroad, including a 746-mile-long line from Norway. All told, Britain has invested about £10 billion ($19.8 billion) in new gas pipelines.
British Gas has already reacted to the price cuts by beating Scottish Power's prices in certain regions. But the changes are slight in all three cases, and consumers might feel the story is a case of too little too late.
"While it is interesting that British Gas tries to make itself a pound cheaper than Scottish Power, it's not much good for consumers," said Graham Kerr, a spokesman for industry watchdog Energywatch. He added that suppliers npower (other-otc: RWEOY - news - people ) and Scottish & Southern Energy (other-otc: SSEZY - news - people ) already offered lower rates than Scottish Power in the same areas, in some cases by up to £30 ($59.24) a year.
Investors seemed to agree, with only slight ripples in the share price of Scottish Power and EDF's parent companies on Friday afternoon. Iberdrola gained 13 euro cents (17 cents), or 0.3%, up to 44.70 euros ($59.66); Electricite de France (EDF) increased 15 euro cents (20 cents), or 0.2%, to 71.75 euros ($95.76).
Centrica (other-otc: CPYYY - news - people ), which does business as British Gas, was up 3.25 pence (65 cents), or 0.9%, to 384 pence ($7.58) in London, a bigger gain that might have more to do with speculation about a possible investment by Russia's Gazprom (other-otc: OGZPY - news - people ). (see "Centrica Heats Up On Gazprom Interest")
Wholesale energy prices have fallen 60% in Britain over the past year, and EDF Energy and Scottish Power are the last of the major suppliers to reflect the change.
"Consumers have had to wait a long time for these cuts to come," said Energywatch's Kerr.
FORBES
by Lionel Laurent
British Gas
Alistair Buchanan
EDF
