E.ON plans to cut gas prices for German retail consumers beyond the reductions it has already announced, if oil prices remain at current levels, a top executive at the German utility told Der Spiegel magazine.
Should crude oil stay at current price levels there will be “significant” gas price cuts on top of a 4% mark-down that is due to take effect in February, Klaus-Dieter Maubach, the head of E.ON’s power generation unit, said in an excerpt of an article to be published on Monday. Electricity consumers could expect lower prices from 2010 if the current trend of falling wholesale prices for oil and coal continues, Maubach was also quoted as saying.
Seven E.ON group regional gas suppliers have said they would cut their retail prices by 4% on average in February, but maintain planned retail price hikes in December. US crude oil prices, at around $55 a barrel, have shed two-thirds of their peak levels in July of above $147. European gas prices are index-linked to oil with a time lag of about six months. The seven regional E.ON group distributors such as Avacan and E.ON Bavaria, said that as oil price rallies in the summer had not yet been fully accounted for, their prices would rise by between 10 and 12% from Dec. 1.
Should oil keep falling at the current pace, then the planned reduction in February might precede another in spring, which they said could be bigger than the measure in February. The regional companies have also said that they would hike power prices by between 7.4 and 9.2% from next February, citing higher procurement costs. (Reuters)