Energy price watch: the wholesale market and your bill
Welcome to the latest edition of 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. From now on, we'll be writing these updates every 3 months.
What’s been going on in the wholesale market in 2017?
- ⚖️ Wholesale electricity and gas prices are at similar levels to where they were in January 2017
- 🎉This year, we dropped our prices twice (hooray!)
- 📈 The first price drop reflected the fall in electricity costs from their peak in November 2016
- 💪 The second was the result of cost savings we were able to make by implementing new technology and speeding up the efficiency of our team
In more detail:
- Major maintenance disabled key generators in the UK and across Europe
- Several nuclear reactors across France were powered down for safety checks after the discovery of faulty parts. The UK is dependent on imports of electricity from France, and therefore this had a knock on effect on UK prices.
- The market was convinced we were set for a cold winter after a chilly October and November
From December 2016, things improved. The winter turned out milder than expected (not the first time they’ve got that one wrong!) Maintenance work on UK and European generators was completed and most of the French nuclear reactors were inspected and given the all clear. These factors combined to bring the wholesale cost of electricity down:
As we approach the Winter, wholesale prices have increased a little. This is expected. Planned maintenance work on many UK and European generators is going ahead, and the French nuclear regulator is continuing to check power plant components. However, at the moment, we don’t expect prices to rise in a similar way to the end of 2016. There are more electricity plants available this Winter compared to last year, which should help to keep prices stable.
Towards the end of 2016, Gas prices were beginning to rise too. This continued into the first few months of 2017. There were two main reasons for this:
- Safety concerns halted work on Europe’s largest onshore gas field in the Netherlands
- Stocks of gas in Europe were depleted thanks to a cold spell of weather on the continent and lower imports of Liquefied Natural Gas (LNG)
A mild end to the Winter meant that prices eventually stabilised and then fell over the Summer. Gas prices have recently moved higher as demand for injection into storage picked up. Storage levels across Europe now look healthy as we move into the Winter, so we expect prices to remain relatively stable.
How has this affected your bill?
This year, we dropped our prices twice.
- April price drop
In April, we cut bills by 3% by lowering our unit rates. This saved the average Bulb member £25 per year. Hooray! This was possible because wholesale electricity costs had been falling since the start of the year.
- June price drop
In June, we were at it again. We cut our standing charge to 25p per day, down from 27p. This saved members £10 for every fuel they have with us - a cool £20 saving for most members. This was possible because we managed to drive our operating costs down thanks to new technology and processes. We’re committed to helping you reduce your bills and will continue to work hard to do just that.