In our previous update of 6 June 2008 we drew attention to the fact that wholesale gas and electricity prices had then reached yet another record high on the back of record oil prices.
We wrote …”To restore the balance between wholesale and retail prices, retail gas bills will need to rise by over 40% and retail electricity bills by over 20% in the next 12 months.”
That 40% figure seems to have caught the imagination and is now doing the rounds as the expected increase (according to unnamed industry sources). The main energy suppliers are even today being grilled by the Commons Select Committee over their pricing intentions for this winter.
Well, were proud to say that you it here first, and we are happy to add our name to our own analysis. And, because energy markets are never static for too long, we have updated the tables and charts with the latest prices.
Electricity wholesale prices have continued to climb and to break into new highs leaving them over 60% up since the beginning of the year.
Although wholesale gas prices appear to have stabilised over the past week, they are still higher than they were 3 weeks ago and 83% up since the beginning of 2008.
To restore the balance between wholesale and retail prices, retail gas bills will now need to rise by almost 50% and retail electricity bills by almost 30% over the next 12 months. Please note that this is not a forecast for the end of 2008. This is our expectation for the next 12 months based on where wholesale energy prices are today.
It’s still right to fix your energy bills…
What we think:
The last time wholesale gas prices broke above retail gas prices was 3 years ago, in June 2005. In the following 18 months energy bills rose by a record 47%. Do not ignore these warning signs. They spell bad news and you need to take steps to protect yourself now.
According to analysis from TheEnergyShop.com, the latest surge in wholesale prices means we can now expect a 48% increase in gas bills and a 28% increase in electricity bills over the next 12 months. This will add another £416 to the average dual fuel bill taking it to £1,465.
We don’t know whether energy bills will be £1300, £1500 or £1700 in a years time. We are however pretty sure that they are going to be a whole lot higher than the £1050 or so at which you can currently fix your energy prices. To protect your finances you have to fix your energy prices now.
Best Capped/Fixed Energy Deals (26 June 2008) Payment by Monthly Direct Debit
The British Gas Price Guarantee 31 Dec 2009 carries a potential cancellation charge for early termination of the contract. The cancellation charges are £20 for electricity and £75 for dual fuel.
The E.ON Energy Saver 3 tariff comes with a free energy monitor and carries an early exit penalty of £35.
The ScottishPower Fixed Price Energy 2009 tariff is fixed until 31 August 2009 and carries an early exit penalty of £30 for electricity and £50 for dual fuel.