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Is there a £40 energy price hike on the horizon?

New research suggests energy companies would need to raise gas and electricity bills in order to compensate for lower demand and higher costs

Barclays predicts that energy companies would need to raise prices by £40 to maintain profit margins

Barclays predicts that energy companies would need to raise prices by £40 to maintain profit margins

A new report issued by Barclays has suggested that an extra £40 would need to be added on to energy bills for companies to maintain their level of profit in 2014.

The reasons behind the potential drop in profits include higher distribution charges and a general fall in energy consumption.

Gas and electricity companies unlikely to raise prices in 2014

Despite these concerns, energy providers are not expected to increase energy bill costs in the run up to the general election.

Barclays’s report also suggests energy bills price rises will be limited following the election, regardless of which party comes into power. The report adds that there is no reason to expect the profitability of the gas and electricity sector in the UK to reach historic highs.

According to The Financial Times, although members of the big six energy companies have argued that making between 5% – 6% profit from sales to retail customers is appropriate, their European counterparts pocket just 2% – 3% profit.

Winter gas and electricity price rises

The news comes just before E.ON becomes the last of the big six energy companies to implement a price rise this winter.

The big six’s price hikes were somewhat curbed by government led cuts to green levies; however, the vast majority of households can still expect to see an extra £50 added to their energy bill this year.

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