F&W News : Brexit vote pushing up household energy bills, claim experts

fredandwilma

Energy bills

Brexit vote pushing up household energy bills, claim experts.

Analysts claim Co-op move to raise bills in October by up to £70 is due to rise in gas import costs driven by slump in pound after EU referendum.

Even smaller energy suppliers may raises their prices before the coming winter, uSwitch has warned.


Energy experts are warning that household energy prices could be about to rise for the first time in two years, driven partly by higher import costs following the Brexit vote.

The Co-op started the ball rolling when it told some of its 500,000 energy customers that, from 1 October, it would be raising bills by between 3% and 6% – the latter equating to a potential rise of almost £70.

The price of wholesale gas has steadily risen over the last three months but Britain is facing a double hit because gas imports from the continent are about 10% higher still, due to a fall in the value of sterling against the euro.

The Co-op is raising the average bill for dual-fuel customers on a standard plan from £1,152 to £1,184 a year. People with pre-payment meters could find their bills rising from £1,115 to £1,184, according to the price comparison site uSwitch.

“This is a worrying warning bell that the wholesale price honeymoon may be drawing to a close. Wholesale prices are now climbing at the fastest rate in years, driven by upward pressure on the cost of energy imports from the falling value of sterling following the EU referendum, future supply concerns and higher transmission costs,” said Claire Osborne, energy expert at uSwitch. “Unfortunately, it’s the smaller suppliers who are less able to cope as they cannot buy their energy as far ahead as the big six [companies]. The danger is that other small suppliers could now follow suit and raise their prices – just in time for winter.”



Osborne claimed the Co-op service was now more expensive than British Gas, SSE or any other of the big six suppliers. She urged consumers “to fight back” by transferring their business to cheaper firms. But there could be still cheaper deals available from a raft of new independent companies.

Cornwall Energy, an independent energy consultant, confirmed that changes in the exchange rate since Brexit had made power more expensive in Britain. Gas imported from other European countries was used in the home directly and for burning in power stations to produce electricity, it pointed out.

Co-op Energy was unable to immediately comment on its price rises. But critics pointed out that the energy trading group of Midcounties Co-op had also been put at the top of a complaints league by the energy ombudsman last November.



SSE attracted the least complaints, while uSwitch said it now believed that British Gas offered one of the cheapest standard rate tariffs, at £1,102 a year. None of the big six firms have increased their prices in the last two years but they have also being losing market share.

Figures from the industry lobby group Energy UK, indicate that 1.3 million customers moved from a large supplier to a small one during the past 12 months, partly persuaded by bad publicity.

The Competition and Markets Authority at one stage concluded that customers using standard tariffs were wasting collectively as much as £1.7bn a year.

It is still possible to find rates from an independent supplier, such as Avro, of £770 a year, but experts say that the smaller firms are less able to withstand rises in wholesale costs as they do not have the cash to hedge their investments.

A reduction in the market share of the big six, from over 99% to less than 87%, over the last seven years, has also forced those companies to cut prices and improve customer service.


Source - the guardian.com/money/2016/sep/01/home-energy-bills-will-rise-following-brexit, Thursday 1 September 2016

D_M_E

Cornwall Energy, an independent energy consultant, confirmed that changes in the exchange rate since Brexit had made power more expensive in Britain. Gas imported from other European countries was used in the home directly and for burning in power stations to produce electricity, it pointed out.

The main reason that energy prices are increasing - despite the fact that they practically always increase this time of year anyway - is that the quid has dropped dramatically against the dollar since Brexit.

Sosumi

D_M_E wrote: »

The main reason that energy prices are increasing - despite the fact that they practically always increase this time of year anyway - is that the quid has dropped dramatically against the dollar since Brexit.

I tend to think that the severely Goved fall in the value of the £ since the EU Referendum has supercharged the underlying rise in energy prices, rather than being the main cause of them.

But it has, most certainly, been a major factor.

Indeed, it's what prompted me to surrender the remaining eight months of a very good one-year fix and opt for a handy two-year fix instead, last July.

I found it reassuring that fredandwilma did the same. :cool:

footyguy

D_M_E wrote: »

The main reason that energy prices are increasing - despite the fact that they practically always increase this time of year anyway - is that the quid has dropped dramatically against the dollar since Brexit.

And it has absolutely nothing to do with the fact that oil prices (which gas prices are linked to, and which therefore electricity prices too as they ar3e in part generated from gas) which were less than $30 a barrel are now more like $45-$50 a barrel. :cool:

Actually, the £ is rising against the $ in recent days

fredandwilma

footyguy wrote: »

And it has absolutely nothing to do with the fact that oil prices (which gas prices are linked to, and which therefore electricity prices too as they ar3e in part generated from gas) which were less than $30 a barrel are now more like $45-$50 a barrel. :cool:

Actually, the £ is rising against the $ in recent days

Could rise to the $60- $70 range sometime in 2017?

We are already seeing increases at the pump. The fuel at my petrol station has increased by 5p per litre in one week. It's gone up 1p every other day.


http://oilprice.com/Energy/Oil-Prices/Forget-The-Pullbacks-Oil-To-See-Strong-Rebound-In-2017.html

Forget The Pullbacks – Oil To See Strong Rebound In 2017

Aug 23, 2016, 4:54 PM CDT

Oil refinery

August 11, 2016 may be the point in this oil price cycle that will mark the start of a sustained increase in crude oil prices. That’s the date that the International Energy Agency (IEA) published their forecast that demand for oil would exceed supply in the 3rd quarter. Shortly after the IEA’s Oil Market Report came out, the Saudi Energy Minister Khalid al-Falih said the kingdom would work with other producers to stabilize the market. Tighter supply and OPEC willing to curb production growth is a recipe for higher oil prices.



When you step back and look at a longer time frame, it is clear that this oil price cycle which started in mid-2014 bottomed in February, 2016. The most recent pullback that started late in June and continued through early August was just the speculators overplaying their hand on the short side. The brief dip below $40/bbl did not get close to the double-bottom in February.



Remember what oil prices have never moved up or down for an extended period of time. There are going to be many pullbacks along the way to a more sustainable price level for oil. I believe that oil will settle in the $60-$70 range sometime in 2017.

During the first week of August, 2016, speculative NYMEX short crude oil positions reached the highest level in at least the past ten years. Since the IEA report came out on August 11th the shorts have been scrambling to cover their positions.





Speculators Set the Price of Oil: The “paper” oil barrel market is much bigger than the “physical” oil market. In fact, the average volume of West Texas Intermediate (WTI) oil contracts traded daily on NYMEX and other commodity trading floors is over 100x the physical amount of WTI and over 5x the global oil supply. Speculators can often temporarily overwhelm the longer-term supply/demand fundamentals, creating volatile short-term oil price swings. When the speculators get blindsided by a change in what is happening in the “real world”, they can get burned.

fredandwilma

Sosumi wrote: »

Indeed, it's what prompted me to surrender the remaining eight months of a very good one-year fix and opt for a handy two-year fix instead, last July.

I found it reassuring that fredandwilma did the same. :cool:

Don't blame me if you're not happy with your fix.


Not long to go to the collective of the year / century?


It certainly is in terms of seeing what sort of impact all the speculation / oil prices / brexit decision and any number of other factors has had on tariffs in collective switches.

I suspect it's less likely to be the "smaller" companies given the rise in crude oil, and more likely to be one of the big six, probably British Gas or E.on?


If it's E.on, i think my / our current tariff will be difficult to match, especially if they're one year fixes.


It would be a tough decision to take a one year fix, (with £30 cashback.)


I suspect i / we got the cheapest fix which is going to be around for well, two years? (which suits me / us,) although speculation suggests prices will spike in again 2018. Still, 2018 is light years away? :rotfl:

D_M_E

I must agree with the above - we had BREXIY, the quid shot down, thus making imports dearer.

While the quid has risen a bit in recent weeks, it's still well below what it was before the vote and its current value must be a factor in rising prices.

As has also been pointed out, the cost of oil is also rising and this will have a major impact on prices, BUT most energy supplies are purchased, I believe, at least a year in advance before being supplied to the consumer, so therefore the rise in oil prices should be a factor for next year, not the current one.

As far as I can see, suppliers generally use the period September to December to announce price increases - to take effect during the period of maximum consumption - with very short notice of when any increase will take effect, then some of them reduce prices shortly after, but not by the same as they were increased by - a 5% increase makes the new price 105% of the old, but a new 3% cut of the new price still means that it is 1.85% dearer than the original price - and with a comparatively long period before any decrease comes into play, and to my mind this is just a way for the company to increase profit at our expense.

fredandwilma

According to UK Energy

Hedging

Energy companies buy a proportion of their supplies ahead of time. This helps make sure they can guarantee the supply of gas and electricity to their customers when it’s needed. Purchasing ahead like this is called hedging and helps to even out prices over time.

Wholesale energy prices

According to recent Energy UK analysis [to be published] – wholesale energy prices account for 36% of the average electricity bill in the UK. The market price is influenced by a number of factors; the price of the input fuel used to produce electricity, as well as demand spikes and supply changes. Companies buy wholesale energy weeks, months and years in advance as well as on the day of use in order to smooth the purchase price over a long period to avoid price spikes. This protects consumers from volatility in the international markets and ensure enough energy is procured to keep the lights on.

It's not as straightforward as it seems?

JJ_Egan

Yes weeks months and years in advance .
This wonderful fix you are on for two years what may i ask are the unit costs and standing charges ??

fredandwilma

JJ_Egan wrote: »

Yes weeks months and years in advance .
This wonderful fix you are on for two years what may i ask are the unit costs and standing charges ??

Companies buy wholesale energy weeks, months and years in advance as well as on the day of use.



Like I've said before, one size doesn't fit all when choosing your energy supplier / tariff. It certainly wasn't the cheapest tariff around at the time, (although it was the cheapest E.on tariff.) It was more of a forward thinking fix / switch.




https://forums.moneysavingexpert.com/discussion/comment/71052135#Comment_71052135



https://forums.moneysavingexpert.com/discussion/comment/70907925#Comment_70907925




Also, what is important to me in terms of choosing a tariff :-



https://forums.moneysavingexpert.com/discussion/5502668



In terms of choosing a tariff?


1) Cost per Kwh

2) Cost of Standing Charges

3) Warm Home Discount available

4) Discounts / Higher Discounts for Duel Fuel, paperless billing etc (which can more than compensate for slightly cheaper tariffs)

5) Excellent Customer Service

6) Extras earned from reward schemes

7) Remaining with preferred energy company


I have to say in real terms, the availability of the Warm Home Discount is huge priority in terms of the extra £140 off my total energy bill per annum, so i'm unlikely to choose any company which doesn't participate, for that reason alone.


In fact - direct from the CEC right now, Green star energy has the cheapest tariff for me at the moment, saving £25 a year, (according to the CEC. )


It may save me £25 a year on the CEC quote, however Green Star Energy don't have the same discounts as E.on for Duel Fuel Discount, Online Billing, No loyalty points, ( worth £15 a year) and most importantly, they don't offer the Warm Home Discount, worth £140 a year, off my bill.

If you add it all up, i would end up paying an extra £200 a year, i.e this cheaper tariff is £200 a year, more expensive for me personally.


I look at the whole package available, not what words tell me on comparison sites.


Info about this new GAS tariff


Supplier Green Star Energy
Tariff name Renewable Saver 12m Fixed 1608 Paperless
Tariff type Fixed
Payment Method Monthly Direct Debit
Unit rate 2.607p per kWh
Standing charge 13.766p per day
Tariff ends on 12 months fixed term
Price guaranteed until 12 months fixed term
Exit fees (if you cancel this tariff before the end date) £30
Discounts Dual Fuel discount per fuel £7.50. Online discount per fuel £7.50.
Additional products or services included None



Info about this new ELECTRICITY tariff

Supplier Green Star Energy
Tariff name Renewable Saver 12m Fixed 1608 Paperless
Tariff type Fixed
Payment Method Monthly Direct Debit
Unit rate 11.731p per kWh
Standing charge 16.370p per day
Tariff ends on 12 months fixed term
Price guaranteed until 12 months fixed term
Exit fees (if you cancel this tariff before the end date) £30
Discounts Dual Fuel discount per fuel £7.50. Online discount per fuel £7.50.
Additional products or services included None

JJ_Egan

fredandwilma wrote: »

C



Like I've said before, one size doesn't fit all when choosing your energy supplier / tariff. It certainly wasn't the cheapest tariff around at the time, (although it was the cheapest E.on tariff.) It was more of a forward thinking fix / switch.



Yes thank you a much debated topic of a few years back .Price rises and how much extra you pay to be locked in .