Memorandum submitted by Scottish and Southern
Energy
DOMESTIC ENERGY
PRICES FROM
30 MARCH 2009
I am writing to let you know that we have this
morning announced a reduction in our prices for domestic electricity
and gas customers which will be implemented on 30 March 2009.
In summary, average prices for electricity customers will fall
by 9% and for gas customers they will fall by 4%.
Inevitably this reduction in domestic prices
will be compared with the falls in wholesale prices that started
between July and October last year. In reality, a meaningful comparison
between the percentage falls in retail prices and the percentage
falls in wholesale prices is not possible, because we did not
pass on to customers anything like the full impact of the wholesale
price rises experienced during 2008. Moreover, wholesale energy
prices remain at high levels, being 46% and 51% respectively higher
in January 2009, compared with January 2007.
It is perceived that price reductions in energy
supply occur much more slowly than price increases. Ofgem spent
much of 2008 looking at this and concluded that there is a lag
between changes in wholesale and retail prices—but they
found no evidence that the lag is greater when prices are falling
than when they are rising.
I know that you will wish to explore these and
other issues when the Committee meets on 11 February. As you know,
Scottish and Southern Energy Group is one of only two of the six
energy suppliers listed on the London Stock Exchange. It is the
view of the Board that the importance of the issues which the
Committee wishes to look into during the session is such that
the company should be represented at Group Chief Executive level
on this occasion. I therefore look forward to meeting you then.
February 2009
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