Find out what’s contributed to a rise in energy prices and enjoy the most popular energy news articles doing the rounds.
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What’s behind this change?
One of the drivers behind energy prices is the ‘Supplier Cost Index’, which is an estimate of the costs suppliers pay to supply domestic customers like yourself. Following a 6% drop in the first quarter of 2017, the Supplier Cost Index remained stable between May and August. A fall in supplier gas costs was offset by a rise in electricity costs, resulting in the Supplier Cost Index increasing by 0.9% overall.
There are two types of energy deals: fixed tariffs which have a fixed price plan for a set period of time, and typically more expensive standard variable tariffs (SVTs) which fluctuate in price depending on the market's base energy prices. When a fixed deal ends, it’s standard practise for suppliers to automatically “roll you over” to their SVT. The price difference between the cheapest available fixed deal on the market and the average price of ‘Big Six’ SVTs reached £230 in February 2017, which is the lowest it’s been for two years. This figure has been increasing since, reaching £300 in July on the back of rising SVT prices.
What’s expected going forward?
As reported in our last Market Watch, costs are unfortunately expected to rise for the rest of the year. From October, suppliers will be required to make capacity payments — insurance policies that make sure consumers still have access to reliable and affordable electricity during blackouts — and these increased supplier costs will result in further SVT price hikes. Additionally, the Supplier Cost Index and costs of supporting renewable/low-carbon electricity generation are also forecast to increase.
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