So what can we make of the announcement that the energy company SSE is freezing gas and electricity prices until January 2016 – that dictates from South American type dictators like El-Milibando to ‘control’ prices actually work – and that SSE are preparing for a May 2015 Labour victory?
Well we know price controls in the distant past always have seem to have adverse repercussions, but I suspect there are a number of commercial considerations going on here, helped over the short run, as SSE mention in their press release, by the government lowering green and other levies, not the threats of El-Milibando.
So as energy prices are volatile, HOW are they really able to absorb the (potential) cost of a general price freeze, rather than the usual smaller ‘special’ plans for those that want to lock prices in for over a year, usually at a price premium to current tariffs?
Sure, they could have raised their prices more than most over the winter, have a company view that energy prices will fall over the next 2-years, or have/will use energy futures contracts to ‘hedge’ their price exposure for the period – maybe a combination of all three,
The commercially and environmentally sad reason might be ahead of a 18-month regulatory enquiry into the industries prices, the proceeds from their decision to downsize and raise £1 billion from cutting staff and either selling, or curbing, the development of offshore and onshore wind farms, could financially hedge their 2-year cost exposure.
When governments try to ‘fix’ markets, IMO there are always negative repercussions.
Please or to access all these features
Please
or
to access all these features
News
SSE fixed energy prices to Jan/2016
5 replies
Isitmebut · 26/03/2014 15:00
OP posts:
Please create an account
To comment on this thread you need to create a Mumsnet account.