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The sort of cod philosophy that insists all challenge presents an opportunity might not be well received by the bosses of the big six. But it would be apt.
After months of lacklustre financial results and steadily rising political risk, the UK’s biggest energy companies have been forced to face down the unholy alliance of George Osborne and Ed Miliband as both call for retail price cuts.
Brent crude prices are half what they were just nine months ago, with wholesale gas and power prices falling to multi-year lows. So the request is neither unreasonable nor unexpected.
But the timing couldn’t be worse. We’re four months away from a general election that could bring a freeze on retail tariffs, and under a year away from the findings of a Competition and Markets Authority probe that could call for total market restructuring.
Plenty of challenge, then. But glimmers of opportunity too, for those willing to take a chance.
Eon was first out of the gate as Osborne fired the starting gun on a big six price cut race. Rival suppliers who were previously sticking to their guns were left in a tail-spin by the surprise break from form.
And Eon isn’t the only one.
When asked if there were any price cut plans in the pipeline, First Utility coolly reminded this publication that it has cut its standard tariff eight times in the past year. It’s most recent price cut? Just over a week ago, we were told.
The smaller hedging position, and lower costs, of small suppliers mean it is easier for them to pass on wholesale price falls. Less political pressure and fewer investment and shareholder obligations make it easier still. This is certainly what the large suppliers would maintain – and with good reason.
But for the big six there is another risk on the horizon if they don’t follow the frontrunners quickly with price cuts of their own. Whatever the naysayers claim, we are in a competitive market and energy prices are in the public eye: customers could vent their anger by switching in droves.
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