Energy News

High Energy Costs 'Here to Stay' say E.ON

Friday 05 June, 2008

By Dan Drage

According to E.ON Chief Executive Paul Golby, low cost energy is a thing of the past.

Increasing wholesale prices and an obligation to financially contribute to £100 billion power stations is pressurising energy suppliers into keeping retail costs high.

Mr. Golby, speaking at the launch of E.ON’s (www.eonenergy.com) energy manifesto, had the following to say:

‘We’ve finished the period of cheap energy; wholesale prices have gone up considerably more than retail prices, so there will be upward pressure on bills’.

He continues:

‘The cost of replacing the ageing energy infrastructure would be in the region of £50 billion to £100 billion, and government targets for renewable energy are extremely challenging.’

Higher costs for the industry manifest themselves as pressure to rebuild almost a third of the UK’s ageing generating capacity, while meeting the demands of the green lobby intensifies.

Market analysts anticipate a 15 to 25 percent spike in retail energy costs to take place by September. Many energy companies are now running their supply businesses at a loss because of higher costs.

Chris Eagle, Commercial Manager at Credit Choices, accepts market conditions are difficult for energy suppliers at present:

‘When energy giants concede their supply business is running at a loss, it’s time to sit up and take notice’

He continues:

‘Another round of price hikes is now an inevitability. Hopefully, measures to protect the elderly and vulnerable this winter will be in place before these increases take place.’

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