Much has been made of the recent drop in the wholesale price of gas and oil. The UK is currently experiencing the lowest wholesale prices since early 2011. However, much of these savings are not being passed on the customer. What’s more, in the last three years (despite a steady drop in prices), the average energy bill has risen 13%. In the meantime, European energy bills have been dropping 0.5% annually despite similar wholesale conditions.
One of the main difficulties is the hold that the larger energy suppliers exert over the market. With the largest 6 energy companies providing up to 90% of all the energy in the UK, it can be very difficult to put pressure on them to bring down prices. A bright point in the debate has been the recent polling showing how the smaller independent energy companies like Ecotricity and Good Energy are held in good favour; they routinely score far higher on customer satisfaction scores. It would be good for the UK energy market for some new, fresh companies to be able to start to gain ground on the traditional energy giants. If that were to happen, it seems likely that we would start to see a more competitive environment with the companies competing not just on prices, but also customer service, availability and helpfulness.
If the wholesale prices cuts had been passed on, experts have estimated that the annual average dual fuel bill could be as less than £1200. With a national average dual fuel bill of £1326 currently, it’s still quite a way to go. The large firms have argued that these wholesale price drops take time to work their way down to the consumer due to large scale, long term bulk buying, but if the cuts are not seen soon, there will be increasing anger and switching of providers.