Energy Bills Set To Increase As Wholesale Gas And Oil Prices Rise
Energy bills are set to increase by around 15% in the next few months as energy providers respond to rising wholesale gas and oil prices meaning higher gas and electricity prices.
Energy companies are preparing to raise gas and electricity prices because of rising wholesale prices. Wholesale gas and electric prices have risen over the last four or five months adding to the woes of consumers facing price rises elsewhere in the economy.
Energy prices are set to rise by 10% to 15% – possibly in the summer – as energy suppliers pass on rising wholesale energy prices. Demand for gas has increased over the last few months largely on the back of the conflict in Libya and the tsunami in Japan. As demand for gas has risen then so have wholesale gas prices as supplies are squeezed. In fact, the price of gas has gone up by a third in the last few months.
At the same time wholesale electricity costs have risen on the back of high gas and coal prices. Utility Exchange reported recently on why electricity and gas prices are so closely linked. But prices are also rising because the price of carbon permits has gone up.
Energy consumers are being squeezed from all directions at the moment with food and fuel prices rising faster than wages. An analyst at Liberum Capital, Dominic Nash, said “Given the increases, utilities are going to have to raise prices”. He added “They will not sell energy for less than they have to pay for it”.
Ofgem has been reviewing the energy market for the last few months and as a result the regulator has told suppliers it wants to force open the gas and electricity market to create more competition. This is because of claims that energy companies increase prices quickly as wholesale prices increase but are slow to reduce prices when and if they fall. Ofgem wants to encourage more suppliers in to the market to help to reduce energy costs.
There are still concerns that energy companies are simply profiteering and the Ofgem proposals, as reported by Utility Exchange, are designed to reduce this.
New Ofgem regulations say that energy companies have to give consumers a month’s notice before they increase prices and sources suggest we could start to see these appear around June.
Business electricity prices and gas prices have gone the same way as domestic prices in the last few weeks. In fact, energy prices are only going one way at the moment so if your business energy contract is due for renewal it will pay to do a business electricity price comparison or gas comparison and choose a fixed price deal as soon as possible.