Saturn warns of energy rises
COMMERCIAL energy broker Saturn Energy has warned businesses could see power bills rise throughout 2011 as suppliers begin to build cold weather risk premiums into their prices.
The cold weather has created record levels of demand for gas, sparked price rises and highlighted the UK’s poor gas storage capacity, said Liverpool-based Saturn’s managing director John McShane.
“The very cold weather has seen wholesale gas prices rise. It was the wholesale price that was used to justify the previous price rises so it’s easy to see why people are concerned.
“But what is perhaps of more concern is that after two harsh winters, we might see next winter’s prices pushed up further as the supply companies build in a risk premium for cold weather. This will be used to cover the cost of topping up supply to meet the extra demand at a time when the cold weather makes the wholesale market more expensive.”
Mr McShane said that wholesale markets for UK gas and power have hit their highest levels for a year at a time when energy and raw material prices were already affecting small businesses across the UK.
According to Saturn the Rough gas storage facility, off the East coast of Yorkshire, which holds 70% of the UK’s reserves gas supplies, currently contains around 20% less gas than the same period last year.
Saturn Energy warned that speculators who bought gas at a lower price in the summer are using the cold weather to drive the price even higher, which could hit consumers even harder in the pocket.
