Bloomberg News

EDF to Cut U.K. Gas Prices After Wholesale Costs Decline

January 12, 2012

(Updates with closing share price in fifth paragraph.)

Jan. 11 (Bloomberg) -- Electricite de France SA’s U.K. unit will cut natural gas prices by 5 percent from Feb. 7 following a drop in the wholesale cost of the fuel, the first of Britain’s “big six” energy companies to lower tariffs.

The average EDF Energy dual fuel bill for a customer consuming 16,500 kilowatts of gas and 3,300 kilowatts of electricity annually will decline 36 pounds ($55.57) to 1,129 pounds, Paris-based EDF said in an e-mailed statement today.

The conflict in Libya and disaster at Japan’s Fukushima Dai-Ichi nuclear plant prompted Britain’s main energy companies including Centrica Plc and SSE Plc to raise prices last year. Ovo Energy Ltd., an independent gas and power supplier, was the first company to bring prices back down last week. Since EDF raised tariffs on Nov. 10, one-year wholesale gas prices have retreated 9.2 percent, it said. That cost makes up about half of a domestic gas bill, the company said.

“What customers want more than anything else is fair, clear and transparent prices,” EDF Energy Chief Executive Officer Vincent de Rivaz said in the statement. “Today’s price cut is further evidence of our commitment to be fairer, simpler and more transparent.”

EDF closed little changed at 18.02 euros in Paris. The stock has fallen 41 percent in the last year, valuing the company at 33.3 billion euros ($42.2 billion).

‘Big Six’ Will Cut

Carbon costs, reduced consumption and government requirements to give some low-income customers discounts on heating bills may make other companies hesitate before cutting prices, Credit Suisse Group AG analyst Mark Freshney said in a note to investors today.

“We think the ‘big six’ will cut if the commodity declines continue, but struggle to see much reason to drop prices now,” Freshney said. The big six are Centrica, EDF, SSE, RWE AG, EON AG and Iberdrola SA’s Scottish Power unit. “We also note that gas supply is a small part of EDF’s retail business, electricity being their key focus.”

Ovo Energy also cited declining wholesale energy costs when the Cirencester, England-based company announced its 5 percent price cut on Jan. 6. “We are able to respond and pass on these savings to consumers,” Managing Director Stephen Fitzpatrick said at the time.

--Editors: Alex Devine, Amanda Jordan

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus