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Government demands power price cuts in the short term

Yet again it looks as though the government and the power companies in the UK are at serious loggerheads with a flat refusal by likes of British Gas and Centrica to reduce energy prices in the short term. The groups have suggested it will not be until the spring of 2009 before consumers see price reductions even though the price of wholesale gas and electricity has fallen substantially in the short term. The government is again threatening to take the companies to court and introduce stricter regulatory powers but as yet this has had no impact.

Many of the U.K.'s power companies complain that they are locked into high-value high-level gas and electricity contracts which were agreed at the higher wholesale prices which we saw earlier this year. The power companies in the UK are coming under serious pressure from all sides with the unions, consumers, government and regulatory watchdogs all demanding to know why consumer prices have not moved in line with wholesale prices.

The main argument is the fact that the power companies were quick enough to increase the cost to consumers when wholesale prices were rising but have so far refused to reduce the cost in line with recent price moves in the wholesale markets.

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