Scottish and Southern Energy was today the last of the Big 6 energy suppliers to put through a price increase for its domestic consumers bringing the total increase in average energy bills since the start of 2008 to 14% (£128 for the average household; £460 since January 2004).
While this is clearly not great news for consumers, the forward-looking picture indicates that there is more bad news the come. The scramble by investors into alternative asset classes, precipitated by the ongoing financial crisis in world markets, has spilled into energy with a knock on affect on wholesale gas and electricity prices in the UK. Wholesale energy prices have continued the surge that began in August 2007. Wholesale gas has increased by 26% since the beginning of 2008 and wholesale electricity is at a new high. As the graph below shows, recent retail increases have NOT kept up with the ongoing increase in wholesale prices meaning that there is now a risk of even more price hikes going forwards.
Recent Retail Price Changes
The increase for E.ON is higher than the headline numbers quoted by the company because it takes into consideration the loss of discount for late pay cash/cheque customers.
Standard Energy Bills now well over £1,000
The average energy bill is now well over £1,000 again and for the unswitched customer the average bill is closer to £1,050. Only those paying by monthly direct debit and/or operating their account online can expect to pay less than 4 figures a year for energy.
Standard Energy Bills – Monthly Direct Debit
Standard Energy Bills – Cash / Cheque
What we think:
The increase from Scottish and Southern Energy was expected. The good news is that even after this increase Scottish and Southern Energy customers will continue to see some of the lowest Standard prices around. Unfortunately that’s about as good as it gets.
The ongoing surge in wholesale energy costs means that the average 14% increase in energy bills that we have so far seen in 2008 is still lagging behind the increase in wholesale energy prices. If wholesale prices stay at current levels then we are looking at further increases and misery for consumers throughout 2008.”
To get your bills back down below the £1,000 mark you have to do one or all of these three things; pay by direct debit, switch to an online tariff and find ways of getting your energy usage down. If you do the first two of these you should be able to pick up a saving of between £168 and £252 a year.
Best (available) Online Energy Deals (as at 20 Feb 2008) Payment by Monthly Direct Debit