Welcome to the Spring installment of Bulb’s Energy Price Watch, where we update you on what is going on in the wholesale energy market and how this affects your energy bill.
Wholesale energy costs typically make up around 40% of your bill, so it’s important we keep you up to date on what’s going on. We do these updates every 3 months.
We last updated you in February. Since then, wholesale energy costs have continued to rise. They are now around 13% higher than they were at the end of February. There is a chance we will need to raise our prices another time this year. If we do, we will give our members 60 days notice. And we don't charge exit fees, so our members can leave at any time at zero cost.
We expect wholesale costs to remain high this summer
Wholesale electricity and gas costs are 13% higher than they were in February
Continued cold weather in the lead up to Spring put increased pressure on already depleted gas stores
High demand for injection into gas storage facilities means the wholesale cost of gas will remain high this summer
There’s a chance we may have to increase prices later this year. If we do, we’ll give our members 60 days notice
Wholesale gas prices are now 13% higher than they were in February.
Since our last update, the weather across Europe continued to be cold. In late February, the UK was hit by a cold wave of weather, dubbed the ‘Beast from the East’. The ‘Beast’ lingered. Temperatures at the start of March were the lowest they’d been at that time of year for over 30 years.
Gas supplies have struggled to keep up with the demand for heating. Storage levels were already low. And several facilities in the North Sea powered down due to the severe cold weather, further decreasing the amount of gas available on the grid. On March 1st, the National Grid issued a Gas Deficit Warning, calling for more gas to be put onto the grid to meet demand. Short term prices for gas reached record highs.
The rest of March was cold too. It even snowed in the middle of the month. Gas storage levels are now at their lowest in at least five years, which means demand for injection into gas storage will be higher than normal for the rest of the Summer. This is likely to keep gas prices high throughout the Summer.
Wholesale electricity prices are also around 13% higher than they were in February. This is largely 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.
How does this affect your bill?
Wholesale gas and electricity prices are likely to remain high through the Spring and into the Summer. Given this, we may have to increase our prices in line with the wholesale market later on in the year. At Bulb, the price you pay for energy reflects the cost.
If we do have to increase our prices, we’ll always give members 60 days notice. And we don't do exit fees, so members can leave us at any time with zero cost. We’ll be back in three months time with another Energy Price Watch update.
Why do wholesale energy prices affect Bulb?
While we only ever buy 100% renewable electricity and 10% green gas, there is only one price for gas or electricity in the UK. There aren’t separate markets for green and non-green energy sources. The price is determined by what people will pay for energy at a particular time, regardless of the source. So, when the cost of electricity produced by burning gas goes up, so does the cost of electricity from wind, solar and all other green sources.