ICIS HEREN, the experts on the prices that the suppliers pay for their energy, have reported this week that UK wholesale gas prices for the winter just gone were their lowest for ten years! Wholesale electricity prices were at their lowest level for nine years.
The suppliers are now getting cheaper gas and electricity than in the past. Over the last two years, like the oil price, wholesale energy prices have collapsed. Wholesale gas is down 52 per cent and wholesale electricity down 34 per cent:
Source: ICIS HEREN – One Year Forward Prices
Why UK Wholesale Gas & Electricity Prices are Collapsing?
1. The economic slow down in China, the world’s biggest gas guzzler, depressing demand
2. Increased oil and gas production in the US and Middle East. The US has hugely increased output from fracking, while the Middle East is producing more and more too increasing supply
3. And in the UK, gas and electricity demand is dropping as we use less energy either because our homes are more energy efficient or we can’t afford to heat them as much.
The net result is too much energy chasing not enough customers on the wholesale market and so prices are sinking like a giant oil tanker with a hole in it. Now this should mean we are all seeing big drops in energy bills, right, as gas & electricity prices in UK are the biggest cost component of an energy bill:
Yet the average bill payer has instead seen a huge increase in bills over the last decade and only tiny falls of late according to the Government. That’e even after the Government gave the suppliers green tax cuts last year.
Average Annual Domestic Gas & Electricity Bills
The figures below are for an average home paying by monthly direct debit
Source: Dept. of Energy & Climate Change (DECC)
At energyhelpline we calculate that suppliers could give an extra 13% price cuts right now to their loyal standard customers.
In the UK, many customers (two thirds according to OFGEM) are so loyal to their energy supplier that almost no matter what they are charged they don’t switch. That’s why the companies feel little pressure to offer price cuts to their standard tariff customers. No profit making company is going to turn away customers who are willing to over pay.
So, keep off standard rates and don’t let your UK energy supplier take you for granted. Keep shopping around and switching you’ll get a good low price for your energy not an extortionate one.