Energy News

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

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:

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

‘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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