Russia pledges to restore gas suppliesFears grow over gas price increase

03 January 2006

The threat to British gas supplies from the spat between Russia and Ukraine seems to be lessening but more price hikes are making it a miserable winter for energy customers anyway.

Russia halted deliveries to Ukraine on Sunday after its neighbour refused to meet demands for a four-fold price increase. Within hours, countries across Europe began reporting low pressure.

Around a quarter of Europe's gas comes from Russia and most of this is pumped through pipelines crossing Ukraine. The stand-off raised fears of serious gas shortages across the continent.

But Russian gas supplier Gazprom has pledged to meet Europe's demand. It said Europe would receive gas 'in the full quantity', with full connections to Europe restored by the end of today.

Meanwhile, consumer group Energywatch has warned that 2006 will be another grim year for consumers after two energy companies raised their power prices on New Year's Day. The news follows increases by other energy companies, such as Powergen and EDF Energy.

Heating cost fears

Energywatch says that Scottish and Southern Energy customers stand to be more than GBP 50 a year worse off as they face an increase of 13.6 per cent on gas prices, and a rise of 12 per cent on electricity. The company supplies energy to 6.1 million consumers across the UK.

Npower also put up its prices - by 14.5 per cent for gas and 13.6 per cent for electricity. Energywatch say the average Npower customer will now pay an extra GBP 58 a year for gas and GBP 38 for electricity.

These rises will affect more than 11 million households. Energywatch Chief Executive Allan Asher said: 'For those who already spend a sizeable proportion of their income on heating, this news will only increase worries about whether they can afford to keep their homes warm.

'No-one should be surprised that energy suppliers are passing on soaring wholesale prices to their customers, but why these wholesale prices are so high cannot be explained simply by the cold winter.'

He added that gas producers - who had made 'billions of pounds of extra profits from these prices rises' - should fund initiatives to help the most vulnerable energy consumers.