Falling oil prices to cut utility costs

The fall in Brent crude oil prices is expected to produce lower costs for utility companies on the cusp of the General Election.

 RBC Capital said the heavy losses in global oil markets since last summer will impact more than a third of gas in Europe, which is still bought through oil-indexed supply contracts that usually have a two- to six-month time lag. This means we may see more generous gestures from domestic suppliers than the recent reduction in gas prices of 3 ½% announced by EON on 13th Jan. Some commentators are suggesting such reductions could reduce the political pressures on the energy industry after the results of the election are known.

However Labour leader Ed Miliband has reiterated his promise to reform the energy market to make it more “competitive” at a party rally Utility Week reports.  In a speech in Salford on Monday, he promised to reform the energy market to ensure the energy companies “operate in a competitive way”.  But happens if we get another coalition without a mandate? It could lead to huge uncertainty in the market at a point when Ofgem will have reported back on its current review of the competitiveness of the electricity market.

Utilitrack Online will provide an informed commentary on events in the lead up to and beyond the election.