The UK’s second biggest energy supplier said yesterday it hoped to cut household energy bills early next year.
Scottish and Southern Energy – which trades in Scotland as Scottish Hydro Electric – said it was “optimistic” about delivering the reduction if wholesale prices for electricity and gas maintained their recent downward trend.
The company, with 8.9million customers through Southern Electric, Swalec and Hydro Electric, said half-year pre-tax profits fell 54% to £302.6million after it delayed price rises until August.
The decision to raise prices for electricity customers by an average of 19.2% and 29.1% for gas customers came after Scottish and Southern Energy (SSE) said it sustained “significant losses” in its energy supply business.
The company said: “The delay itself was a further demonstration that the competitive market and the comprehensive scrutiny to which energy suppliers are subject is the best counter to upward pressures on bills.”
Energy companies are under pressure to reduce annual gas bills by £100 a household as a result of the recent fall in wholesale costs. SSE said: “If wholesale prices for electricity and gas maintain a downward trend, SSE is optimistic that it will be able to deliver reduction in prices for domestic customers during the early part of 2009.”
The company said it procured energy through a variety of long and short-term contracts, which meant there was a time lag between rises and falls in wholesale prices and changes in the prices charged to domestic customers.
The decision to delay price rises until August meant SSE added 450,000 energy supply customers in the six months to September 30, meaning it has almost doubled its number of energy supply customers in just over six years.
Energyhelpline director Mark Todd said the downward trend in wholesale prices meant possible drops of 25% to 35% in consumer gas prices. He added: “We can expect a significant 10% to 20% drop in energy bills if wholesale gas market prices stay the same. Scottish and Southern Energy has said it is optimistic for a fall in its prices and we predict British Gas to be one of the earliest and biggest reducers of energy prices in 2009.”