Energy Costs To Go Down?

[manxchatterbox]

on the BBC news tonight reports of lower gas prices...wholesale prices are down by 20% and in the UK the Ofgem regulator says conumer prices should fall and in the FT

 

Wholesale electricity and gas prices fall

By Kevin Morrison and Rebecca Bream

 

Published: September 12 2006 03:00 | Last updated: September 12 2006 03:00

 

Winter wholesale gas prices have fallen by a quarter - and electricity prices by 30 per cent - in the past four months, putting pressure on utilities that raised bills to start planning price cuts for next year.

 

So what do the MEA and Manx Gas have to say for themselves?????

 

full article:-

http://www.ft.com/cms/s/893ceb34-41fb-11db...00779e2340.html

[Chinahand]

Both the MEA and Manx Gas have a Fuel Cost Adjustment, so as prices come down you should see bills drop. BUT both organizations hedge their purchases and so there is a disconnect between spot prices and the current costs of gas been used/supplied.

 

With forward buying etc it could take anything up to six months for price drops to feed through.

 

Don’t forget this works both ways … you benefit for 6 months as prices rise with the FCA staying lower than the spot price would indicate. Plus hedging stops the peaks, and troughs, making your bills unpredictable.

 

So as long as prices consistently come down there is no doubt the FCA will come down. The FCA is auditable by the Office of Fair Trade regulator and is highly political … the companies can’t manipulate it without the regulator threatening fines etc and Tynwald going Beserk … so things will track through, eventually, don’t panic MCB.

[Gladys]

I posted something similar some time ago (reflecting the recent British Gas ads for a fixed price deal with a guaranteed drop at the end) but was poo poo'd and the arguments were that this was just a matter of hedging. My argument then was that hedging can smooth price increases (and falls, if that is your objective) but at some point prices will revert to the open market rate. Let's hope so, eh?

[Chinahand]

I posted something similar some time ago (reflecting the recent British Gas ads for a fixed price deal with a guaranteed drop at the end) but was poo poo'd and the arguments were that this was just a matter of hedging. My argument then was that hedging can smooth price increases (and falls, if that is your objective) but at some point prices will revert to the open market rate. Let's hope so, eh?

 

I agree with you Gladys ... one point for anyone in the UK with a British Gas supply ... going for a fixed price deal is VERY risky at the moment ... you could well be locking in peak prices for upto 5 years ... this is wonderful for BG; hence the saturation advertizing campaign .... don't do it.

[Celt]

Firstly MCB, as you seem to have short and long term memory loss. This has all been reported in some form in the Press.

 

Manx Gas and the MEA have, as far as I know and reported in the press, both bought a Fixed Gas Price Package up untill the first 4 months off next year. So you will see them , and any company who has done such, reducing sod all untill the Purchased Package being used up.

 

Secondly. You cannot compare the MEA and Manx Gas in any way shape or form whatsoever as apart from being an Energy Provider.

 

The Mea are owned by the Government and work on a Minimum Profit with mostly only a " Mark Up " to cover future upgrades/investment and or maintnence and such. Any profit goes back into the Public Purse.

 

Manx Gas however work on Maximum Profit which will also include future upgrades and such but all the profits go to the Company Shareholders. As Manx Gas is owned by an Off Island Company ,the Government see sod all off any profit especially now the the Corporate Tax Law is in being.

 

So if any decrease is in the wind, I would imagine it will only be from the MEA as they could agree something with the Government but a sit's Government owned, We, the Tax payer, will lose out on any extra monies coming from the MEA. So, NO, you won't get a reduction .

 

Interesting to see the Manx Gas confered with the Office of Fair Trading before they bought any Set Price Package. I'll be interested to see the OFT report when it comes out and I wonder if Manx Gas has got wind of anything ?

 

The MEA has been doing it for yonks with no problems, make me wonder anyway.

[John Wright]

The business may not be taxed but it has to distribute a minimum percentage profits to qulify, they go to an offshore holder and witholding tax applies