27/09/2006

Phoenix Gas announces price rise

Phoenix Gas has today announced that it is to increase prices by 14.5% commencing on October 1 2006.

This is the third time this year in which Phoenix Gas have raised costs.

The average annual household bill is now expected to rise by £77 extra per year.

This is expected to be Phoenix's final review before the opening up of the household market to competition in January 2007.

Peter Dixon, Chief Executive of Phoenix Natural Gas, today said: “Phoenix recognises the impact higher energy costs have on our customers and it is important to clarify to our customers today why the tariff price has changed; it is the continuing volatility of wholesale energy prices that is driving the cost increase. It has been widely reported that wholesale energy prices for this coming winter have fallen from their record highs earlier this year. What I can confirm is that we are buying gas for our customers this winter at these lower prices. However, these prices are still, unfortunately, higher than those of last winter. If prices fall further, Phoenix is committed to reflecting any reduced cost we pay for our gas in the end price to our customers.”

The Consumer Council has described the increase as “a hard but predictable blow to the household budget” and also called on the Regulator to move quickly to pass through any savings to consumers if gas costs start falling as they are predicted to do.

Wesley Henderson, Director of Energy and Corporate Services at the Consumer Council, said: “We pay extra when the gas price goes up – so we must pay less when the price goes down. A price increase is unwelcome at any time for gas customers but particularly when people are already worried about rising rates and pending water bills. It will undoubtedly pose further hardship to people whose incomes are not keeping up with rising household bills.

“However, we know from experience that it is better for consumers pay a fair and transparent price that reflects how much it costs Phoenix to bring gas to people's homes. Following a detailed examination of Phoenix's price review and in conjunction with Ofreg (the Regulator) we believe that this increase is reasonable and largely driven by the recent high price of wholesale gas.

He added: “It is also important to note and welcome Phoenix's and the Regulator's commitment to ensure that if the cost of wholesale gas continues to fall over a sustained period, these savings will be passed on to consumers in a future price review – possibly as early as April 2007.”

Iain Osborne, chief executive of Ofreg (Office for the Regulation of Electricity and Gas Northern Ireland, said the new prise rise was "clearly another blow to gas consumers, and particularly those who struggle to pay their bills."

He added: "Ofreg has been working with Phoenix and the consumer council in recent weeks to understand what is driving this tariff increase, and as a result this rise is around a quarter lower than Phoenix's initial proposal."

Mr Osborne said he was satisfied the price increase announced represented a reasonable adjustment.

He added: "Some commentators are suggesting that the commissioning of additional supply infrastructure in Britain will lead to lower wholesale gas costs over the coming year.

"If so, Ofreg and Phoenix have agreed that the reductions will be passed on to consumers."

(EF/KMcA)

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