Is an energy price war kicking in?

Wholsale Energy Prices March 2009

Wholsale Energy Prices March 2009


Wholesale gas and electricity prices finished February down another 9% and 12% respectively, the fifth successive monthly decline in prices.
 
Wholesale gas prices are back to the levels where they were at the beginning of 2008, whereas electricity prices are back to levels last seen in October 2007.
 
Against a backdrop of falling wholesale prices, 5 of the Big 6 energy suppliers have announced price cuts in either gas bills (1), electricity bills (2) or both (2).
 
Compared to the fall in wholesale prices, the opening round of retail price cuts has started fairly cautiously and tends to suggest that the major energy suppliers have still not fully exhausted the supplies of the more expensive energy that they purchased in the summer of 2008. We believe that there is scope for further cuts later in the year as these expensive energy contracts are replaced with much lower priced energy. This is supported by a statement in Centrica’s interim results….
 
“In January 2009, as a result of a recent fall in wholesale energy prices and with the energy bought at high prices in 2008 partially used up, we announced a reduction of 10% in our standard gas tariffs…”
 
But, if we have to wait until the Autumn for more cuts from the major energy suppliers, could the price war be kicked off from another angle. This week’s move by new entrant first:utility suggests this might be the case.
 
This week first:utility cut the price of its Smart Energy Dual Fuel (V2) tariff by 6% for new customers. This now makes it the second overall cheapest tariff in the market at average consumption levels after British Gas’ WebSaver 2.
 
However, while first:utility may have not taken the coveted number one slot, do bear in mind that the first:utility tariff is a smart meter tariff for which a smart meter is provided by the company and for which first:utility have waived the connection fee. More important however is that, while the tariff is not uniformly competitive in all areas, where it does hit the number one slot (in the Midlands) it undercuts the nearest rival by £60 to £80.
Wholesale Gas Price v Retail Mar 2009

Wholesale Gas Price v Retail Mar 2009

What we think:
 
“We support what first:utility are doing and if this price cut puts pressure on the Big 6 to further reduce bills then all the better. However, even if you don’t end up switching, the important thing is to do a comparison for 2 main reasons. Firstly the price cuts by the Big 6 suppliers have been all over the place with some customers seeing no cuts at all. It’s important that you check to see where you stand. Secondly, the first:utility tariff is great value in some areas but not so hot in others. Do the comparison to see how it stacks up for you.”

 
Key features of the first:utility Smart Energy Dual Fuel (v2) tariff include:
 

  • Smart Meter tariff which means that you get billed only for what you use and can better track your energy usage.
  • first:utility provide the meter. Connection fee is waived.
  • Only available to new customers.
  • Please note that there is an initial contract period of 24 months with this tariff.
  • Please note that there is a £50 exit penalty if you leave before the end of the contract period.
  • Available online through www.TheEnergyShop.com

Latest Price Changes
Please note that this table has used headline rates for price cuts as announced by suppliers. Actual rates may vary when the detail is released. Only British Gas has so far released its rates. We are for now sticking with their headline numbers for comparability reasons.

Latest Price Changes March 2009

Latest Price Changes March 2009


Source; www.TheEnergyShop.com
The increase shown is for the average of Monthly Direct Debit and Cash/Cheque bills (excluding any prompt payment discounts) for the relevant suppliers’ Standard tariff based on an average usage profile.
 
Aggregate Increase 2008
Aggregate Energy Price Increases 2008

Aggregate Energy Price Increases 2008


Source; www.TheEnergyShop.com
The increase shown is for the average of Monthly Direct Debit and Cash/Cheque bills (excluding any prompt payment discounts) for the relevant suppliers’ Standard tariff based on an average usage profile.
 
Best Deals (4 March 2009) Monthly Direct Debit
Best Energy Deals Monthly Direct Debit March 2008

Best Energy Deals Monthly Direct Debit March 2008


Source; www.TheEnergyShop.com
 
Best Capped/Fixed Energy Deals (4 March 2008) Monthly Direct Debit
Best Fixed Capped Energy Deals March 2009

Best Fixed Capped Energy Deals March 2009


Source; www.TheEnergyShop.com
Please note that all Capped/Fixed deals now have exit penalties for early termination. Please see our website for further details.

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