8 December 2008
Gas and electricity providers are unlikely to pass on reductions in wholesale energy costs to their customers in full, it has been claimed.
According to the Chief Executive of energy company E.ON UK, firms will have to protect their profit margins in order to make investments in renewables.
Paul Golby was speaking to the Observer after a number of energy providers signalled their intention to reduce domestic gas and electricity prices in the spring.
But he warned: "If wholesale gas prices have fallen by a third, it does not mean retail prices will go down by the same amount."
He said that as a result of the government's environmental targets, energy firms will have to spend around £100 billion on new wind farms and power plants.
Companies will therefore require large profits in order to meet these costs, Mr Golby insisted, warning that energy will be "far more expensive in the future than in the past".
Last week, E.ON announced plans to cut bills for its electricity-only customers by £14 a year in response to Ofgem's claims that those without access to mains gas are missing out on competitive pricing through dual fuel deals.
Households could save on their gas and electricity by switching to another supplier.