Thursday, 18 November 2010

Wholesale Gas and Electricity prices: How are they calculated?

Energy prices are going up. Both British Gas and Scottish and Southern
Energy (SSE) are putting up their gas and electricity tariffs in December,
and other major energy providers may follow suit soon. The companies have
blamed a 25% increase in wholesale costs this year. But have wholesale
prices gone up? And how does the wholesale price relate to the figure that
appears on your energy bill? Gas prices graphs
Is blaming the wholesale price justified?
Wholesale prices With other costs to supply energy relatively fixed and constituting a small
part of your overall energy bill, energy suppliers almost always cite
wholesale prices as the reason
behind a change in their tariffs. But at any one time there are many different wholesale prices, so to say
they have gone up by 25% is meaningless. All of these wholesale prices have
in fact gone up over the period quoted by SSE and British Gas. But anyone who knows anything about the energy market also knows that a
wholesale price movement can be found to support pretty much any retail
energy price change - whether up, down, big or small.

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