Households face the possibility of further rises in their energy bills, after the cold weather that has struck the country caused gas prices to rise to the highest level for 18 months. The National Grid has reported a significant increase in the demand for power as many parts of Britain have been experiencing unprecedented low temperatures for this time of year.
Demand for gas yesterday was 25 per cent more than it was at this time last year and the third highest daily amount on record, as households and businesses turned up their thermostats. The surge in demand caused concern in the wholesale markets, with the price of gas jumping 11 per cent to 62p per therm – the highest level in 18 months.
Electricity also surged ahead in price, climbing to £71.25 per megawatt-hour, up from £55 the day before – the highest level in two years and up two-thirds since the beginning of winter. Experts gave warning that as a result households face the possibility of record energy bills, as they turn up their heating, plug in electric heaters and stay at home.
There were also fears that not only could consumers use more gas, but they could pay more through companies putting up their prices.
The so-called "spot" prices in gas and electricity – which jumped yesterday – are the price companies pay for immediate delivery.
Though companies buy the bulk of their supplies on the forward market, by buying contracts guaranteeing delivery in three or six months' time, they rely heavily on the spot market to cover short-falls caused by sharp jumps in demand.
Experts yesterday warned that a prolonged cold spell could have an impact on domestic power bills.
The current average annual household energy bill – including gas and electricity – is £1,228. This is slightly lower than the record it hit during January 2009 when they reached an all-time high of £1,293, but nearly double what they were five years ago. The majority of experts fear that there are more energy price rises to come. This winter three of the big six energy suppliers have announced bill increases, with most kicking in yesterday at the start of the month and as the cold weather started to bite.
One supplier, EDF, has promised not to raise their prices until March 2011, but the remaining two, E. On and Npower are widely expected to increase their tariffs if not in the next few days, then certainly after Christmas.
Not only are the remaining three suppliers expected to increase their tariffs, but the fear is that those who have already moved could put up their prices once again. In 2008 all of the suppliers put up their prices on two separate occassions, within three months of the first rise.
The more immediate fear is that consumers will have to pay far more for their energy this month than at any other time, because they are using far more to keep warm.
According to Energyhelpline, a price comparison site, in the last three days the average household has consumed 47 per cent more energy than normal for this time of year. In January 2010, when temperatures plummeted in a similar fashion to this week, Britain's reserves of gas fell substantially. National Grid had to impose gas rationing on some companies, such as car factories.
Most believe that the country is in a better position this winter, however market insiders expressed surprise yesterday that European companies started to buy gas that was held in British storage facilities, sending gas across the Channel through the pipeline known as the interconnector.
Last week Ofgem, the industry regulator, launched an investigation into the major gas and electricity suppliers, after it calculated that companies were making £90 per profit from each customer on an annual basis, a jump of 38 per cent over the last three months. It said it wanted to check if firms were "being straight" with its customers. Some said that this investigation would make it very difficult for energy companies to put through price rises without incurring a political backlash.
Gas is used to heat about 80 per cent of homes and to generate about half of the country’s electricity.
Business customers should call 0800 458 6460
Domestic customers can save money by visiting this site
http://www.getmecheapbills.com
