Eastern increases gas prices

Eastern Group, the regional electricity firm which has become the second-biggest supplier of gas to industry, has raised its gas prices by up to 40 per cent, bringing to an end a bonanza of low-cost energy supplies for companies.

The move follows revelations in the Independent earlier this month that Eastern'spolicy of grabbing market share by selling gas too cheaply had left the group facing losses of tens of millions of pounds.

Over the past few weeks the market price of gas has soared, leaving many suppliers with low-price contracts to sell fuel in the competitive business market at a substantial loss.

However, the increase in the spot price for gas could significantly help British Gas, which is burdened with pounds 40bn worth of take-or-pay contracts to buy gas at inflated prices.

Eastern said its stocks of gas secured earlier this year when prices were low had largely been exhausted. "We've reviewed our forward portfolio for next year. As we buy more gas our prices have got to go up," said Trevor Turner, the managing director of Eastern Natural Gas, the supply operation. "You've got to keep your eye on the ball. We are continually analysing our business."

Mr Turner said Eastern had recently started selling its gas around the current "spot" price of 14p a therm. This represents an increase of up to 40 per cent over its previous average price to industrial customers of about 10p to 11p a therm.

Eastern, acquired last year by Hanson, confirmed that Mr Turner was to leave the gas business next month. He has been promoted to the role of director of business development and will be responsible for managing the transition to domestic competition for electricity supplies, due in 1998.

The increase in Eastern's gas prices could trigger price rises by other gas suppliers, significantly increasing industry's energy costs. Gas brokers last week confessed to being "staggered" at the rise in the spot price, which is trading at its highest level for almost two years. The price of gas for winter delivery rose on Friday to more than 17p a therm, an increase from just 10p a therm in May.

One suggestion is that British Gas has been withholding supplies from the market to raise the price, though executives deny this. Its North Morecambe field has not produced any gas for months, and the company is believed to be buying more gas than usual on the markets through Accord Energy, its trading arm.

Rising gas prices could help to reduce mounting losses on British Gas's take-or-pay contracts, which guarantee to buy gas from offshore producers at around 19p to 20p a therm. The increase in spot prices from 10p to between 14p and 17p a therm has relieved some of the pressure.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing