Buyers blast 'cheap' electricity claim

8 June 2005
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09 June 2005 | Liam o'Brien

Senior energy buyers have rubbished a report claiming that UK purchasers benefit from the lowest industrial electricity prices in western Europe.

A study by consultancy Accenture found that industry and commerce in the UK paid ?3.88 per kiloWatt hour (kWh) in 2004 compared to ?6.1/kWh in Germany and ?7.14/kWh in Italy, the highest price paid, at pre-tax and volume-weighted prices.

The European Union average was ?5.2/kWh. The study covers the period before 10 new members joined the EU.

Martin Rawlings, vice-chairman of the CIPS energy committee, slammed the findings. "The report is a total waste of time".

Rawlings, who is also managing director of UK and European power consultancy Energytrak, said the country's electricity prices were among the highest in Europe.

"I get my price data from traders and I tend to believe what they are telling me rather than this report.

"The problem is [Accenture] doesn't compare like with like. For example in Spain there is a price cap and in France there is still a lot of subsidy. Germany has the only market comparable to ours, and we are more expensive."

Don McGarrigle, electricity adviser to the Major Energy Users' Council, said there were gasps of disbelief when he read the report to a council meeting.

"The findings are a load of rubbish because they do not bear any relation to the experience of industry and commercial customers," he said.

"It is also dangerous because it creates a false impression of what is going on in the market, which is actually that the UK is 50 per cent more expensive than France and Germany and 30 per cent more expensive than Holland."

David Kwiatek, group energy buyer at local authority group Eastern Shires Purchasing Organisation, said: "I find this remarkable because I know of reports that say we have among the highest prices.

"The problem is that economists choose a mix of rates from different sources to compile these reports, but economists don't buy electricity on the markets."

Kwiatek said he was being quoted ?60 per megaWatt hour for October, when it was ?48 in Holland and ?40 in Germany.

Responding to the criticism, Accenture told SM the report accurately reflected costs in 2004.

SMjun2005

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