Get Your Crystal Balls Out !
Will energy prices come down?
With experts anticipating long-awaited cuts in bills in 2007, we assess the prospects of your gas and electricity costs in the coming year.
January sees three energy companies implement price rises after record increases throughout 2006.
The year kicks off with a previously announced rise from Scottish & Southern Energy on 1 January. SSE gas bills will increase 12.2% while electricity prices go up by 9.4%.
A week later, on 8 January, customers on the popular British Gas Click Energy tariff will suffer 12% increases in gas and 10% increases in electricity bills. These are the same rises that British Gas applied to the bulk of it's customers in September.
Finally, npower is jacking up the price of its Gas Guardian Tariff – the plan launched to tempt disaffected British gas customers – with 39½% increases planned.
Other customers on fixed price deals may also feel the heat as their current deals come to an end and they are placed on a more expensive tariff with their supplier.
Those on Powergen or Scottish Power's capped deals will see their bills rise from next week as their fixed period comes to an end.
The increases cap 12 months of record energy price rises – gas up 54% and electricity up 36% overall – and the pain of price increase announcements will only continue when the bills themselves start rolling in.
Paul Green from energy price comparison business Energyhelpline.com said: 'Millions of consumers are going to be hit by the worst bills on record, with the three waves of price rises that have taken place this year about to filter through to winter bills due to arrive on doorsteps the second week of January.'
The rises mean that the levels of fuel poverty – when individuals spend more than 10% of their disposable income on heat and light – will jump to 2½m after the latest increases take hold.
But there may be light at the end of the tunnel. Earlier in December British Gas announced that it planned to cut bills from Spring 2007.
It is unclear if the other energy suppliers would follow suit – British Gas is the most expensive supplier and has been steadily punished as customers switch to rivals – but it could signal more cuts in prices.
Suppliers claim the big increases of recent years are justified because the wholesale price of energy – what the suppliers themselves pay – has been high by historical levels. They have bought as much as nine months of energy in advance at these higher prices so they need to pass this extra cost onto consumers.
However, wholesale prices have fallen sharply in 2006 - mainly because of new imported supplies of gas have become available via pipelines from Norway and the Netherlands.
The wholesale price of gas is down by 36%. Cheaper gas also means cheaper electricity because suppliers use gas to run 40% of electricity power stations.
These prices falls should trickle down to customers and reduce their bills in 2007.
All eyes will be on the suppliers to see how quickly they pass on reductions to their customers and the industry watchdog, Energywatch, has called for a Competition Commission investigation into the market to ensure that suppliers are not artificially keeping bills high.
Whatever happens to prices, customers should shop around to make sure they are paying the least possible for their energy bills. Use services like the one here to switch to the cheapest suppliers.The Daily Mail reported yesterday that British Gas were about to introduce a £5 penalty fee for all customers who do not pay their bills within 28 days. British Telecom did the same thing in January 2005. This is outrageous when they are promising price reductions - talk about "robbing Peter to pay Paul" - especially when they are closing down their Stokeley Park operation and making 1300 people jobless - cheeky monkeys!
Enjoy your day - its my birthday today and I feel terrific and glad to be alive !
Make Good Choices People !
From Your Friend The Energy Angel