EDF’s Slower Price Rise Anticipates Cut in U.K. Energy Subsidies

EDF Energy Plc raised U.K. prices at a slower pace than its peers in anticipation the government will reduce social and environmental subsidies that add to bills.

At the same time, the U.K. unit of Electricite de France SA (EDF) warned that it may need to review tariffs again should such cuts fail to go ahead as expected, it said today in a statement.

The company’s prices will rise 3.9 percent from Jan. 3, the fifth increase by the so-called Big Six suppliers that dominate the U.K. market after Scottish Power Ltd. on Oct. 24. Scottish Power, owned by Iberdrola SA, said it would push up its gas prices by 8.5 percent and power by an average of 9 percent.

EDF Energy’s slower increase makes it harder for its home supply business to be profitable next year, the company said.

Prime Minister David Cameron’s government is seeking to cut bills that have surged 30 percent in real terms since 2007. He’s ordered a review of green levies in household utility bills to try to regain the political initiative after the opposition Labour Party promised to freeze power prices if elected in 2015.

EDF Energy said today that it would pass on any savings from bigger-than-expected changes in the government-run Energy Company Obligation program to its customers.

“I support the ambitions behind these social and environmental programs,” Chief Executive Officer Vincent de Rivaz said. “We are ahead on the ECO scheme and our experience has been positive but we must also challenge the cost and affordability of this and other schemes.”

While EDF said that the parts of the program aimed at helping “vulnerable” customers shouldn’t be changed, a 50 percent cut in the target for hard-to-heat homes would mean “significant savings,” according to today’s statement.

EDF’s average standard variable price from Jan. 3 will be 1,300 pounds ($2,065), up 49 pounds a year, the company said.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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