This is a golden opportunity. Energy suppliers, so long public enemy number one, could get out in front of the CMA’s final recommendations, cut gas prices to reflect falling costs, and give consumers a few extra pounds in their pockets as Christmas approaches. Sure, there’s the old argument that gas suppliers buy their wholesale gas in advance on hedged prices, but surely after six years of falling costs, that’s wearing thin?
Energy suppliers could look to their cousins in the water industry for inspiration. Nearly all the water companies chose not to take their allowed price increase in the final year of the last regulatory cycle, following some sledgehammer hints from regulator Ofwat. Most have gone on to cut prices in real terms from this year. Meanwhile, water companies have maintained their broadly positive public profile and the politicians have kept their hands off. Is that a coincidence? Unlikely.
Ofgem is issuing its own sledgehammer hint this week – and energy companies would do well to listen.
• And so Hinkley hits the front pages again, with the long-awaited confirmation of Chinese funding to get the deal off the ground. But while the blanket national coverage of the new nuclear revolution has focused almost entirely on the foreign ownership aspect, the real risks may be closer to home. As Jillian Ambrose explains on p18, the chances are the technology will be outdated by the time it finally comes online – and that’s if you take the very optimistic view that it will be delivered on schedule. Meanwhile, the UK will have had to take alternative measures to mitigate the looming capacity crunch forecast for the mid-2020s, and as EDF and its Chinese partners count their profits, the country will be lumbered with a very expensive white elephant.