Encouraging new research by energy market analysts has shown that gas and electricity prices tumbled towards the back end of 2015.
In fact, wholesale gas and electric costs in Britain were at a five-year low as last year drew to a close, according to a survey conducted by market information provider ICIS.
The cost of energy on the market slipped to £36.76 per megawatt hour on the Power Index. This could be attributed to a mild winter and tumbling lower global commodity prices.
Despite the falls, there is still pressure on the big six main energy suppliers to slash their prices in line with lower costs.
Amber Rudd, energy secretary following last year’s general election, has promised to continue lobbying the main energy and gas providers, asking if their prices reflect the wholesale market.
In August, British Gas slashed its gas prices by 5% in August, but the remaining five providers did not follow its lead.
Which? executive director Richard Lloyd expressed his disappointment at the majority of the main players in the market. Lloyd said, ‘it’s extremely disappointing millions of us are still paying way over the odds for our energy. Consumers will rightly ask why their bills haven’t been cut dramatically when wholesale costs have dropped.’
‘The Government needs to protect vulnerable customers from being ripped off and make people feel confident about switching supplier,’ Lloyd added.
Oversupply of gas
More research from ICIS indicates that alongside milder temperatures, an oversupply of gas in the wholesale market was assisting in keeping prices low. The firm said, ‘more gas from around the world in the form of liquefied natural gas is expected to come to the UK, as more production capacity comes on-stream in 2016.’
Zoe Double, head of power at the ICIS, also noted, ‘current market prices for delivery two to three years ahead show that participants expect UK wholesale energy prices to remain low. She went on to say that electricity prices had fallen less than gas as there was, ‘less spare supply capacity.’
Wholesale prices for gas tumbled by 34% over the course of 2015, with electricity prices slipping by 23%.