Wholesale Gas Prices Drop and Energy Companies Told to Cut Bills
By Anne Lewis-Schneider
Energy price analysts are saying that wholesale prices of gas have dropped and therefor the energy companies should be considering a drop in prices for the consumer, which in their opinion should drop the average household gas bill by £39 a year. Wholesale prices have seen a 16% drop since the month of December which is largely due to the mildness of the winter months being experienced in the UK.
Energy companies do not agree to this because of the nature of fluctuating prices on the international market, which tend to rise and fall on a daily basis. They have said that the cost of wholesale gas only plays a marginal role in the billing of consumers. Gas is purchased on what is known as the futures market in a bid to protect themselves against sharp increases in the price of wholesale gas.
An analyst, Trevor Sikorski feels that it is time for prices to come down, as he says that prices in December of last year were 72pence per therm for the year period starting in April of 2014, and that prices currently being charged have dropped by 16% to 60.5pence per therm. He has said that energy companies should start considering lowering gas prices and passing this on to the consumer.
The winter has been milder than was expected and with this, the need for
The largest supplier of gas in the UK is British Gas, and they have commented that the price of gas is not calculated on a day to day basis, but rather on a yearly basis according to hedging on the world market prices. They have no intention of lowering their prices at the moment. Npower has followed suit, saying that a drop in prices now would only be reflected in a years’ time. They have added that this is in an effort to hold gas prices stable and that they would not increase the price of gas if there were a sudden jump in wholesale prices either.
Gas companies have reiterated that the wholesale price of gas only makes up for 55% of the billing for gas specifically and 47% of the average dual fuel bills. Energy UK is in agreement with these figures. They say that since government has adjusted the green levies and social expenses, fuel bills have only risen by an average of 4.3% for the current year.
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