Scottish and Southern Energy became the first leading UK energy supplier to raise the prospect of lower gas and electricity bills for 2009, putting pressure on its rivals to also look at cutting tariffs.
Ian Marchant, chief executive, said the fall in oil prices had caused a reduction in wholesale gas and electricity prices, bringing down the cost at which energy companies supply their customers.
“If the trend in wholesale prices continues, we are optimistic that bills can come down next year,” said Mr Marchant.
He said he thought wholesale prices had further to fall and that SSE would make a decision on the level of its bills “in the early part of next year”.
A rise in wholesale gas and electricity prices in the first half of the year, in line with oil prices, led to higher energy bills from all of the UK’s “big six” suppliers. But according to Energyhelpline, the utility switching site, forward gas prices for this winter have now fallen to 67p ($1) a therm, from £1.10 a therm in the summer.
This rise in fuel costs in the first half of the year had a negative effect on SSE’s earnings for the six months to September 30. Group revenues rose from £5.65bn to £9.19bn, reflecting the fact that SSE raised its customers’ energy bills. But higher gas and coal costs squeezed profit margins and pre-tax profits fell 55 per cent from £656.1m to £294.5m.
In spite of the drop in first-half profits, SSE said it still expected “modest growth” in full-year earnings. This reflects expectations of a stronger second half as more of SSE’s power stations come back on line after outages and fuel costs drop.
“The availability of some of our thermal power stations has been disappointing and we have had to deal with very high wholesale prices for electricity and gas while trying to shield our customers from the worst of their effects,” said Robert Smith, chairman. “But the outlook for the remainder of this year and beyond is more positive.”
Mr Marchant said that the integration of wind power business Airtricity, bought in January this year, was going well and that SSE had made a profit of £100m on the sale of a 50 per cent stake in the Great Gabbard offshore wind project to Npower Renewables, which was announced last week.
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