Energy price watch: our prices are going up
Unfortunately, energy prices have continued to rise since our last update in August when we said that we might have to increase our prices. So, sadly, we do. Wholesale energy costs have increased by 15% since August.
We're increasing our tariff for the average UK home by 11.1%. The average home will see their annual tariff increase from £923 to £1,025 - a rise of £8.50 per month. Existing members will stay on their current rates for 60 days until 11th November. New members will start on our new rates straight away.
Wholesale energy costs have gone up
Wholesale energy costs have gone up substantially since June 2018, continuing the trend we've seen throughout this year. These costs are now 15% higher than they were just last month. Over the past year, wholesale energy costs have risen by nearly 50%. Following our Price Principles, we've been slow to pass on these costs to our members. We’ve held off for as long as we can, but we aren’t able to put off an increase any longer. Our tariff will be increasing by £102 per year for the average UK home.
What caused wholesale costs to increase?
Wholesale energy costs are now 18% higher than they were in June 2018 (Gas is up 20% and electricity is up 14%)
Gas storage levels are still behind where they need to be as we head into winter
Maintenance on Norwegian gas fields continued for longer than expected
Sustained demand for injection into storage and concerns about storage levels heading into winter have pushed gas prices higher
Wholesale gas prices are now 20% higher than they were in August.
In our last update in August, we explained that Ofgem, the energy regulator, was forced to increase the level of the safeguard tariff, which protects vulnerable households from being overcharged, due to higher gas prices. Later in August, gas prices hit a three-year high.
Since then, gas prices have continued to rise. At the end of August, unplanned maintenance work on fields pumping Norwegian gas to other European countries was extended. This will reduce the amount of gas coming from Norway throughout September, further pushing gas prices up.
As we head into winter, there are concerns that gas storage levels are behind where they need to be. The wholesale cost of gas could remain high during this time.
Electricity prices are now around 14% higher than they were in August 2018. This is mainly driven by the change in gas price. The UK is still heavily dependent on gas-fired power plants for electricity generation. So, higher gas prices mean higher electricity prices too.
While we don’t need another reason to get behind renewables, the growing amount of electricity coming from green sources will help to reduce our reliance on gas-powered generators.
Our Price Principles
At Bulb, we’re committed to pricing fairly. While we really don’t like doing price increases, our single tariff does reflect the true cost of energy. And unfortunately, while we’ve held off for as long as we could, wholesale energy costs have moved so significantly we do need to pass those costs on to our members. As ever, we’ve followed our Price Principles. We’ve put them here so you can hold us to our word:
1. Just one tariff
We have one single tariff so if you’re with us, you’re always on our best deal
We don’t charge exit fees – you’re free to leave us at any point
2. We reflect the true cost of energy
We review our prices every week
When costs fall by more than £20 per year, so will your tariff
If they rise, we work hard to limit cost increases to you and we’ll always give 60 days notice of a price rise
3. Radical transparency
We show how our tariff compares to all other suppliers on our homepage
We explain what we’re doing in plain English, not industry jargon
A real person is on hand to answer any questions you have
Why do wholesale prices affect Bulb?
We always buy 100% renewable electricity and 10% green gas. However, renewable generators will sell to whoever is prepared to pay for it (and rightly so!). This means that when fossil fuel prices go up, renewable prices go up too.
How did we do in explaining this?
No one likes a price increase, so we’ve tried to go about this in the best way possible. Here’s what steps we took - how did we do?
We sent an email to all of our members on the 9th August explaining that we might have to increase our prices
We let every new member since then know that we might increase our prices
We’ve given all our members 60 days' notice from today. This is double what Ofgem recommends
We write a wholesale market update every three months so that everyone can keep on top of energy news
Is there anything else that we could do to make price increases less painful in future? Let us know in the Bulb Community if you can think of anything.