Why You Shouldn’t Wait For Energy Price Falls
After a summer of scary price hikes, the end of 2008 came with a glimmer of hope that, this year, our gas and electricity bills could get cheaper. That’s still possible – but you may have to make the savings happen for yourself…
After a year of energy price increases, it’s likely many of us hoped the end of 2008 would also mean the end of rising gas and electricity bills. Over the 12 months from last January to December, the cost of the average household’s energy shot up by over 40% – leaving the price of heating and lighting our homes as high as £1,200 per year.
But by Christmas, the wholesale cost of gas and electricity (the price suppliers pay for the fuel they sell on to us) had shrunk sharply from its summer peak. As a result, many people began to hope that energy companies would soon pass on these price falls – resulting in much-needed cuts to the cost of consumers’ gas and electricity.
The good news
Partly thanks to pressure from MPs, the Energy Secretary Ed Miliband and energy watchdog Consumer Focus, several of Britain’s ‘Big Six’ energy suppliers (British Gas, npower, E.ON, EDF, Scottish Power and Scottish and Southern Energy) have said that they hope to cut prices in 2009.
Already, Scottish Power has cut the cost of gas on its Price Sure fixed price energy tariff by 10%. (However, it’s worth remembering that opting for a fixed-price energy deal now will prevent you from benefiting if prices fall further.)
Scottish Power’s move has been taken as a positive sign that other energy companies will follow suit. Many industry experts predict a lowering of gas and electricity prices in 2009, with some suggesting falls as steep as 20%.
Why are we waiting?
Britain’s biggest energy companies have been careful to point out that any reductions in our gas and electricity bills will be conditional upon “sustained” falls in the wholesale price of energy.
In recent months, companies have been paying less for energy on wholesale markets – so theoretically, they should be able to charge consumers less too.
However, unforeseen events including the unusually cold UK weather – and particularly the ongoing dispute between Russia and Ukraine over its gas usage – have seen the wholesale price of energy creep back up in the past few weeks. Unfortunately, these developments cast a shadow over the possibility of quick price cuts.
While energy analysts still suggest suppliers will reduce the cost of energy for consumers in 2009, it’s now rumoured this move could take months. More worryingly, some industry insiders predict it might even be autumn before companies are prepared to reduce the cost of gas and electricity for UK households.
Switch and save
In the meantime, Britain is experiencing its coldest winter for several years – and each time many of us turn up the heating, we also heighten the pressure on our purse strings.
Cynics argue that Britain’s energy suppliers will use any excuse to keep our energy prices inflated – and the alarming number of people now in fuel poverty (where 10% of the annual household income is spent on energy) has prompted the government to push harder for price reductions.
Likewise, we should push energy companies to compete for our custom – shifting our business from suppliers who short-change us to ensure that we’re getting the best deal.
If you’re feeling the pinch, a key way to combat this is to switch your energy supplier using a comprehensive online comparison tool. Our utilities service could save you up to £391 a year* – and, according to users, it’s a “very straightforward and simple” way to save money.
Rather than waiting for Britain’s energy companies to cut the cost of your energy, why not take action yourself? Ensuring that you’re paying the best possible price for your gas and electricity remains the best way to stay warm – and save money – on these dark, cold nights.
Compare UK gas and electricity suppliers
* The saving of £391.42 relates to a high end user with postcode NR3 2BH (28000 kWs gas and 4950 kWhs electricity), if the customer has moved and is making quarterly payments. Effective as of 14/10/2008.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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