Stick or Switch?

Wholesale Energy Prices Feb 2009

Wholesale Energy Prices Feb 2009


Wholesale energy prices in the UK have taken another pounding in February driven by the onset of (slightly) warmer weather reducing demand for gas, and with more nuclear generating capacity coming back on stream.
 
Gas and electricity wholesale prices have fallen by some 15% since the end of January 2009. 1-year forward wholesale prices for both gas and electricity are more than 50% off their 2008 highs, and lower than their opening levels of 2008; before the last 2 rounds of record price hikes began. Against this market background, the clear direction of retail prices is downwards.
 
Energy companies have started to make announcements of cuts in energy bills, although not always on both fuels. The start to this round of price cuts has been cautious. One possible reason is that much of the downward pressure on prices has been over the next 12 months, whereas longer dated contracts trade at higher prices. Wholesale gas prices for 2011 delivery are 35% higher than the year ahead price quoted above. For electricity the figure is +18%.
 
All things taken into consideration, retail prices are still set to fall further in 2009.
 
It seems clear that UK consumers won’t see the benefit of recent wholesale price falls in one big cut in energy bills this time around. It is now almost certain that we’ll see 2 smaller adjustments to bills; one now (more or less) and another (subject to prevailing wholesale prices at the time) probably in the Autumn. Against this background, what do we, as consumers, do?
Wholesale Gas v Retail Prices Feb 2009

Wholesale Gas v Retail Prices Feb 2009


What we think:
 
The argument for waiting is based on the fact that we don’t yet know what the remaining 2 suppliers (npower and ScottishPower) will do with their own prices cuts. It’s a point, but it misses the bigger picture, which is that you can get three times the saving by switching now rather than waiting for your supplier to cut your bills for you. And every day you wait is costing you money.”
 
TheEnergyShop.com is currently recommending British Gas WebSaver 1 tariff for the following reasons.
 

  • The WebSaver 1 is currently, on average, the cheapest tariff in the market at average energy usage.
  • WebSaver1 guarantees that it will stay at least 10% cheaper than British Gas’ standard tariffs. So if British Gas cuts prices again, WebSaver1 prices will also fall. This guarantee runs all the way through to 31 March 2010.
  • It is available to both new and existing British Gas customers.
  • Whether before or after the British Gas and Scottish and Southern Energy price cuts, customers on Standard tariffs with these suppliers will enjoy significant savings by switching to this product.
  • Please note that there is a £60 exit penalty if you leave before September 2009.
  • Only available online and through selected price comparison websites including 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 Energy Price Changes Feb 2009

Latest Energy Price Changes Feb 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 Feb 2009

Aggregate Energy Price Increases Feb 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.
 
Best Deals (18 February 2009) Monthly Direct Debit
Best Energy Deals Feb 2009 Monthly Direct Debit

Best Energy Deals Feb 2009 Monthly Direct Debit


Source; www.TheEnergyShop.com
 
Best Capped/Fixed Energy Deals (18 February 2008) Monthly Direct Debit
Best Capped Fixed Energy Deal Feb 2009

Best Capped Fixed Energy Deal Feb 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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