Energy price rises continue

16 March 2006
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16 March 2006 | Rebecca Ellinor

Energy buyers can expect continuing supply constraints and frequent price rises this year, according to leading analysts.

John Hall, managing director of John Hall Associates, made his predictions at a CIPS Swindon branch event on the future of the energy supply market.

He added that increased speculation from city traders was likely to have a big impact on prices that are already volatile.

Ian Dobson, chairman of CIPS energy committee, added: "It looks like price will only go up over the next two to three years - but it's only an indication."

Hall repeated calls for the government to appoint a secretary of state for energy. "We've got a part-time minister so energy's not high on the agenda," he said.

"The government doesn't think it's worth appointing an energy minister and without one we get a laissez faire attitude across the rest of the UK. It's not treated as a priority," added Dobson.

Hall said he hoped the government's energy review leads to a new energy policy. He suggested buyers start planning their energy supply for the next three years.

"You could take a supply contract from October 2006 for three years and buy quantities of gas and electricity today for part of the contract period. If you buy in tranches you have a better chance of beating the market using financial tools instead of taking a fundamental supply and demand approach," he said.

Steven Fawkes, general business manager at energy services firm RWE Solutions, which manages outsourced utilities for Sainsbury's and other firms, said another option is to outsource the management of all utilities.

He said this could potentially save around 20 per cent by using energy more efficiently instead of just making meagre savings on operations and maintenance.

CIPS Swindon is holding a follow-up event on 28 March.


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