energy news
Over the past 4 years there has been significant rises in gas and electricity prices from Energy suppliers.
Wholesale gas prices have risen on the back of the record cost of oil; any increase in the price of crude has a knock-on effect on gas. Wholesale gas prices in the UK are also said to have been driven higher by the growing number of energy firms on the continent turning to the more liberalised UK market for cheaper supplies.
So who provides your energy?
Double digit power price rises - that is a huge amount, what's the reason?
The problem for all energy suppliers is that the price they have to pay for gas and electricity has risen in recent months. The larger suppliers such as EDF and Npower highlight that wholesale price have surged throughout the past years. EDF says gas prices have risen by 117% and electricity prices by 90% in some instances over the period.
Companies also cite a doubling in their spending commitment to reach government carbon emission reduction targets, and costs of transporting energy supply to gas and electricity customers has also risen substantially.
I thought that wholesale prices had dropped? What's been going on?
It is true that wholesale prices had fallen from highs seen in early 2006 but they began to rise again in about February 2007. A variety of factors have been at play. Most of our gas still comes from the North Sea, but production has been declining faster than was expected. As a result, the UK has had to import more of its total gas supplies.
Meanwhile, the wholesale price of gas - which is linked on the continent to the price of crude oil - has been driven higher by record oil costs.
Rising coal prices have made producing electricity at coal-powered plants more expensive. And as European firms turn to the UK's more liberalised market for supplies as a cheaper alternative to that offered in mainland Europe, that has also driven up UK wholesale prices.
So what is wrong with importing more?
Not only has imported gas become more expensive, it has also been hard to get hold of. British Gas says that transporting gas through the European pipeline network is tricky, because it is owned and run by a variety of national monopolies or semi-monopolies on the continent. Last year the European Commission found that said some of Europe's biggest energy firms were holding back gas supplies and promised a crackdown on "anti-competitive behaviour". It accused big European energy suppliers of holding back gas supplies, stifling competition and thus driving up prices.
What can gas users do?
Big industrial users often agree to pay whatever the prevailing market price is, so they can probably do little but grin and bear it. But some have cut back production and laid off staff. Domestic customers have the option of trying to use less gas and electricity - if they can - or trying to find a cheaper supplier. In addition, some suppliers offer their customers the chance to sign up to a long term contract, which guarantees prices for a specified period.
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