FOCUS British Gas/Powergen price war hots up |
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Fri, 16 Feb 2007 14:52
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LONDON (AFX) - British Gas, the retail arm of Centrica PLC, today returned fire in the price war that has engulfed the utilities sector.The company responded to yesterday's salvo from E.ON AG arm Powergen by revealing the details of its online tariffs, which will make it the cheapest in the sector.Powergen said yesterday that its dual-fuel gas and electricity rates would come down by 8 pct or 79 stg a year and its internet discount would rise by 4.2 pct on average. A spokesperson said that its average online dual fuel bill would be around 820 stg.However, British Gas's 'Click 2' tariff will cost on average 785 stg for dual fuel, with 306 stg per year for electricity customers and 494 stg for gas customers.This tit-for-tat process will continue as utilities come under pressure from regulator Ofgem to slash their consumer prices, which rose sharply last year due to soaring wholesale costs and have contributed to the highest levels of consumer price inflation for a decade.Analysts are predicting a full-scale utilities' price war, prompted by falling wholesale gas prices since their peak last Spring.Utilities will want to slash prices to stay competitive, but the current prices reflect wholesale prices six months ago, because utilities buy their contracts half a year or so ahead. The companies, in other words, face a difficult tightrope to walk between being lambasted by public opinion and Ofgem on the one hand, and seeing their margins disappear on the other.Centrica said British Gas would cut standard gas and electricity prices by 17 pct and 11 pct respectively from March 12.george.hay@thomson.comgh/ambCOPYRIGHTCopyright AFX News Limited 2006. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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E.ON's Powergen to cut energy bills - report 