EDF to put up gas prices by 15%

15 September 2011 Last updated at 10:19 GMT The Energy and Climate Change Secretary Chris Huhne, "I'm absolutely determined we will not take this lying down."

EDF Energy is to raise gas prices by 15.4% and electricity prices by 4.5% from 10 November, the company has announced.

It is the last of the "big six" energy companies to announce increases in prices for domestic customers.

It said it had absorbed wholesale price rises for as long as possible before being forced to raise costs for customers.

Regulator Ofgem is studying whether higher prices are justified.

"We have absorbed rising wholesale energy, network and other costs as long as possible but must reluctantly now pass some of these through to consumers," said Vincent de Rivaz, chief executive of EDF Energy.

The annual cost of a standard dual-fuel bill paid for by direct debit would rise to £1,165 from £1,051, the company said.

Final move

EDF follows the other five major energy suppliers - British Gas, Scottish Power, Scottish & Southern Energy, Npower and E.On - in announcing price rises.

The tariffs across the industry have included price rises of up to 18%.

Scottish Power Scottish & Southern British Gas Npower E.On EDF

"The fact that EDF Energy has made smaller and later hikes than other suppliers is welcome, but it will not soften the blow on those who are struggling on tight household budgets," said Mike O'Connor, chief executive of watchdog Consumer Focus.

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There remains a widespread lack of understanding and suspicion of the industry as a whole”

End Quote Vincent de Rivaz EDF chief executive The moves have prompted the energy regulator Ofgem to step up its investigation into pricing by the big six suppliers.

It has brought in the forensic accountants BDO to see if energy firms understated their retail profits to justify higher prices.

Mr de Rivaz said that "suspicion" of the industry needed to be addressed.

"We recognise there remains a widespread lack of understanding and suspicion of the industry as a whole, among the public, customers in general, politicians, regulators and others," he said.

"It is important this perception is addressed. The energy challenges Britain faces are far too important and can only be addressed in a world with trust, open dialogue and mutual understanding.

"If a Competition Commission inquiry is necessary to build this trust, then it is a step that should be taken."

Bills

Last month, EDF admitted that 100,000 customers had been overcharged owing to a seven-year fault on the company's automated telephone meter reading system.

Paul Lewis from Money Box gives tips on how to save money on energy bills

The problems occurred at times when EDF changed its prices between October 2003 and May 2010. This led to £200,000 of overcharging, although customers affected are being reimbursed, including interest.

Mr de Rivas apologised for "service issues" suffered by some customers.

An analysis of entries on Twitter about customer service found that 11% were positive and 70% negative in relation to EDF, according to social media monitoring company Brandwatch.

The highest proportion of negative comments among the big six suppliers was 73% about Npower.

"Twitter is an exciting new venture for Npower and we are finding it an engaging way to talk to our customers," said a spokesman for the company.

Meanwhile, earlier this month, EDF said it had joined Scottish and Southern Energy and British Gas in halting unsolicited doorstep sales of gas and electricity contracts.

Inflation

Heating costs contributed to the rising cost of living reported by the Office for National Statistics (ONS) on Wednesday.

The rate of inflation measured by the Consumer Prices Index (CPI) rose to 4.5%, from 4.4% in July. The Retail Prices Index (RPI) measure increased to 5.2% from 5%.

Debt advice service the Consumer Credit Counselling Service said that one in three people contacting the charity for help were in fuel poverty.

This is when a household is spending more than 10% of its income on heating.

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Oil prices fall on economy fears

5 September 2011 Last updated at 16:20 GMT Continue reading the main story Oil prices have fallen on concerns that the US could fall back into recession, and continuing anxiety about eurozone debt levels.

With fears about a slowdown in China also hitting sentiment, US light crude had fallen $2.40 a barrel to $84.05.

Brent crude was also lower, dropping $1.66 to $110.67 per barrel.

The falls come after data on Friday showed that the US economy added no new jobs in August, a much worse reading than had been expected.

Analysts had predicted that the non-farm payrolls figures from the Department of Labor would show about 70,000 new jobs had been created.

The unemployment rate remained unchanged in August at 9.1%.

In Europe, the main share indexes were down sharply as concerns continue about the high debt levels of eurozone countries, and how these could impact on the wider economy.

Germany's Dax index and France's Cac were both 2.6% lower in morning trading.

Meanwhile, a report in China said that the country's service sector grew in August at its slowest pace since records began.

"Oil is falling on worries over weak demand, unemployment and talk of a double dip recession," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

He added that oil prices would be falling further were it not for growing optimism that the US central bank, the Federal Reserve, will announce new measures later this month to try to stimulate the US economy.

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World stock prices rise over US debt deal hopes

LONDON — Investors boosted stocks and sold safe-haven assets Monday, betting that a last-minute deal in Washington meant the U.S. economy would avoid default.

There remained a widespread assumption, however, that credit ratings agencies could downgrade U.S. Treasuries from their vaunted triple-A status, a move that would impact the valuation of numerous other assets.

Investors were also digesting data pointing to stagnant growth in the global economy, with Chinese factory activity slowing and euro zone manufacturing falling.

Story: House passes bill to prevent US default

After a tense weekend spent in search of a compromise to allow the U.S. borrowing limit to be lifted, U.S. President Barack Obama said leaders from both parties reached a deal to cut the budget deficit by $1 trillion over 10 years, with additional savings of $1.4 trillion possible.

The plan must be passed by both houses of Congress and will still face some opposition. But it is expected to allow the debt ceiling to be raised, avoiding the prospect of Washington not being able to pay its bills and defaulting.

World stocks as measured by MSCI climbed 0.6 percent with emerging market shares up 1.2 percent.

Video: Will a deal restore faith on Wall Street? (on this page)

There were large gains in Japan, where the Nikkei rose 1.3 percent. In Europe, the FTSEurofirst 300 rose 0.7 percent with banking shares enjoying a big boost.

But there remained a degree of skepticism about how long the rise in risk sentiment would last, given the likely U.S. downgrade, which some believed could come this week.

"It is a relief rally on the back of the parties coming together, but it could only last for a couple of days as the United States could now face a ratings downgrade," Manoj Ladwa, senior trader at ETX Capital, said. "That would impact every part of the United States."

Story: Economists warn cuts to federal spending ill-timed

It would also raise issues for assets elsewhere. Some large pension funds, for example, will only hold triple-A debt, meaning they may have to sell Treasuries and buy elsewhere, crowding trades into German Bunds, for example.

The relative valuations of a number of assets, meanwhile, are based on their difference from supposedly risk-free Treasuries.

The flip side of Monday's stock rally was the unwinding of investor positions taken to protect against U.S. default.

Gold fell more than 1 percent before recovering. It was at $1,616 an ounce after hitting all-time nominal highs last week.

The dollar rose against the Swiss franc, which has seen intense interest from investors as the dual euro zone and U.S. debt crises have stirred markets this year.

Commodity currencies — those tied to the prospect of large developing market growth — climbed, with the Australian dollar nearing a 29-year peak against the greenback hit last week.

"In the short term, there will be relief in market sentiment today and maybe this week, as the U.S. will avoid a default, but the problems are not fully solved so I think we will see a muted reaction," said Richard Falkenhall, currency strategist at SEB in Stockholm.

"You have the risk of ratings agency downgrades, and no further fiscal stimulus in this deal," he said.

On bond markets, yields on U.S. Treasuries and core euro zone debt rose, reflecting some selling to release money parked in fixed income in the run-up to the U.S. deal.

The premium investors demand to hold Italian and Spanish government bonds rather than benchmark German Bunds fell in line with the outperformance of riskier assets.

Copyright 2011 Thomson Reuters. Click for restrictions.

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House prices in UK 'stabilising'

29 July 2011 Last updated at 12:03 GMT Chief Economist at Nationwide, Robert Gardner: "It's a very stable picture in the housing market at the moment"

House prices are stabilising, according to the latest monthly report from the Nationwide building society.

Prices across the UK rose by 0.2% in July, to £168,731, leaving them just 0.4% lower than a year ago.

The society said demand for homes was still sluggish, and a gradual rise in the supply of available houses was keeping prices stable.

Separate figures from the Bank of England showed a slight rise in mortgage activity.

Down and up

Although prices are almost the same as they were a year ago, since July 2010 they have fallen and then recovered, according to the Nationwide's measurement.

Completed sales are still running at roughly half the level recorded before the banking crisis. Since December 2010, the average house price, not seasonally adjusted, has now gone up by 4%.

Economists often argue that the best guide to short-term trends is to compare the average price over the last three months with that of the previous three.

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Property transactions are at severely low levels due to the disconnect between buyers and sellers”

End Quote Matt Hutchinson Spareroom.co.uk The Nationwide says that on that basis, prices have risen by just 0.3%.

The building society's chief economist, Robert Gardner, said this stability reflected the "uncertain" state of the economy.

"House prices remain relatively high compared to incomes and, together with more demanding deposit requirements, this is dissuading, or at least delaying, some first-time buyers from entering the market," he said.

"The Nationwide talks of stability, but this is little more than a euphemism for stagnation," said Matt Hutchinson, director of flat and house sharing website Spareroom.co.uk.

"With the exception of London, property transactions are at severely low levels due to the disconnect between buyers and sellers. Properties are not selling because what buyers are prepared to pay falls well short of what sellers are willing, or able, to accept."

Figures released on Thursday by the Land Registry, which covered prices in June, found that prices over the previous year had varied significantly in different regions of England and Wales.

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Mortgage market The number of home loans approved for house purchases rose slightly in June, according to figures published on Friday by the Bank of England.

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Pressures on household finances such as high inflation and low wage growth are clearly taking their toll on the ability of households to save”

End Quote Adrian Coles Building Societies Association There were 48,421 mortgages approved for house purchases - higher than the average of the previous six months of 45,850.

But, with few signs of interest rate rises in the coming months, the pace of remortgaging activity has slowed.

Although there was a slight rise in the number of approvals for remortgaging to 30,705, this was below the average of the previous six months.

Consumer borrowing through loans and credit cards also rose slightly in June, the Bank's figures showed.

Figures from the Building Societies Association (BSA) show that the stock of savings held in mutuals in June shrunk by £362m.

"Pressures on household finances such as high inflation and low wage growth are clearly taking their toll on the ability of households to save," said BSA director general Adrian Coles.

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Ofcom cuts rural broadband prices

20 July 2011 Last updated at 11:39 GMT Some rural areas struggle to get decent broadband speeds Rural broadband bills could fall after telecoms regulator Ofcom moved to cut the wholesale price that BT charges other internet providers.

The company is the only operator in many smaller telephone exchanges and ISPs have to factor 'renting' BT's equipment into their price plans.

That means customers often miss out on cheaper deals available in towns and cities.

The reduction only affects broadband services of up to 8Mbps.

From mid August until March 2014, Ofcom has ruled that BT must cut its rates by 12% below inflation per year.

Rural campaigners welcomed the news.

The Countryside Alliance said it was "delighted" by the decision.

"People living in the countryside have been left behind in the digital divide for far too long and it is vital that they have effective and affordable broadband if their rural economies are to grow and prosper," said a spokesperson.

Same prices

Many ISPs, other than BT, are able to offer consumers cheap broadband through a system known as local loop unbundling (LLU), where they place their own equipment in the exchange.

In less populated areas, where this may be uneconomical, they have to effectively 'rent' the system for delivering their service from BT

BT Wholesale's costs are passed on, typically adding around £10 to customers' broadband bills, according to the website Broadbandchoices.co.uk.

BT said the impact of the cost reductions on its revenues would be in the "low millions".

The prices BT Retail charges consumers will remain the same.

"Unlike many other providers, despite the higher costs involved, BT Retail's consumer broadband products have always been priced the same in rural areas as in urban areas," the firm said in a statement.

Ofcom has not applied the reduced charges to ADSL2+, a next-generation copper-wire technology which offers speeds of up to 24Mbps.

It said it hopes that this will encourage BT Wholesale to invest more in this.

Fibre network

The government is keen to see next-generation services thrive in rural as well as urban areas as it aims to make the UK the fastest broadband nation in Europe by 2015.

Critics have argued that relying on copper technologies will not future-proof networks and have urged operators to invest in fibre optics which can provide much faster services.

Whether consumers will benefit from the price cuts is not yet clear, say industry watcher.

"Any retail price reductions that follow from this wholesale announcement will be welcomed by consumers, but the extent to which providers will reduce prices is uncertain," said Sebastien Lahtinen, co-founder of broadband news service ThinkBroadband.

"The wholesale cost reductions may be used by broadband providers to ease congestion at peak times by adding capacity instead."

"It is also important to note that the price control only applies to 'up to 8 meg services', which may be seen as a regulatory green light to encourage BT to upgrade rural exchanges to support faster 'up to 24 meg' ADSL2+ services, in the knowledge that they will be able to secure a higher return on investment," he added.

TalkTalk is planning to expand its network to 90% of the country by spring 2012 but it currently does rent capacity on the network to others.

Meanwhile Fujitsu is bidding for government money to create a fibre network for rural areas. Both Virgin Media and TalkTalk have said they will offer services on it if the bid is successful.

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