Date: 11th November 2008
Release date: Immediate
Subject: Energy companies “ripping off” consumers
Local Tory Parliamentary Candidate, Gordon Henderson, has accused big energy companies of “ripping off” consumers in Sittingbourne & Sheppey.
The accusation follows news that the wholesale prices of gas and electricity have fallen by around 30% in the past couple of months. It is estimated that if energy companies were to drop the retail price of gas by just 10% consumers would save between £80 and £90 in a year.
The justification used by the Energy Retail Association for no reduction in prices is that the industry buys its gas and electricity many months in advance, so changes in wholesale prices take about six months to feed through to household bills.
Mr Henderson said:
‘Quite honestly the energy companies are ripping off consumers. Their excuse for not passing on the drop in wholesale prices simply doesn’t stand up to scrutiny.
‘If we accept on face value the statement by the ERA that it takes six months for a fall in the wholesale price of gas to be reflected in the retail prices, then why was it that when the wholesale price went up in March, April and May, that those increases were passed on to consumers in June, July and August?
‘So the big question is this: If it only takes three months for price rises to kick in, why should it take six months to pass on a cut when prices drop?
‘Unless the Industry can come up with a very good explanation for that discrepancy, consumers have every right to carry on feeling they are being ripped off.’
Attached chart showing last 12 months natural gas wholesale price fluctuation which can be found at http://www.rigzone.com/news/finance.asp?cid=7&tp=1Y