How does the UK stack up on business energy prices?
Energy prices fluctuate throughout the year. We regularly see news reports covering increases or decreases in gas and electricity prices, and petrol costs often feature heavily in the headlines. But when we break down all the data included in government releases, you can actually uncover some interesting facts about the UK’s energy industry.
The latest release was the Quarterly Energy Prices document from the Department of Energy and Climate Change, and the team at Love Energy Savings have dug through the numbers to pull out the most interesting findings...
How does the UK compare to Europe on energy prices?
Looking at the UK’s energy prices on their own, we can never really gauge how cheap or expensive they may be. Compare them to the rest of Europe, and we start to get a clearer picture on how we stack up. The latest government release offered an international comparison, which yielded some rather interesting findings.
The key finding showed the dramatic difference between gas and electricity prices. For the second half of 2015 (July to December), electricity prices proved to be the more expensive form of energy. For domestic customers, electricity was ranked the eighth highest in the EU 15, whilst for industrial consumers, it was ranked as the second highest.
On the other hand, gas was shown to be much more competitive for UK consumers. For domestic customers, gas prices stood at the third lowest in the EU 15, and for industrial consumers, they were the sixth lowest.
Of course, there are a number of factors involved that could explain such a variation in prices, including inflation and the current exchange rate between the pound and the euro. There is some suggestion that oil and gas are closely correlated, and towards the end of 2015 and the start of 2016, we saw diesel and petrol drop below £1 a litre for the first time since 2009.
If this correlation is correct however, domestic and business customers may not benefit from lower gas prices for much longer. Oil prices have started to creep upwards recently and following the news of the UK’s impending exit from the European Union, many fear that this could cause oil prices to rise even further. Only time will tell on this front.
More people are switching energy suppliers
The latest release also showed an increase in the number of homeowners choosing to switch their energy supplier. From the figures, we see that the number of gas suppliers being switched increased by 22% from 703,000 in Q1 2015 to 858,000 in Q1 2016.
For electricity, the number of switches increased by 26%, taking 867,000 transfers in 2015 over the 1 million mark to 1,093,000 in 2016.
It would appear that our opinions towards switching energy are also starting to change. In February 2016, the Public Attitudes Tracker from the Department of Energy and Climate Change showed that whilst we were concerned about our bills, very few people were doing anything about it. This tells a different story to today’s figures, something that Love Energy Savings is very pleased to see!
Phil Foster, Managing Director at Love Energy Savings, commented on the figures, saying that they were reassuring:
“It’s encouraging to see so many people taking how much they pay for energy into their own hands. Much more is being done to educate the public and business owners on the many benefits of switching energy suppliers, as well as how quick and easy it is becoming.
“We hope to continue to see these figures rising as the regulators and government push for even shorter switching times. It’s all about making it easier for the consumer, and one of the best ways to save money on your energy bills is to switch suppliers - let’s make sure as many people as possible know this.”
So where are these customers going? Latest figures from Cornwall Energy suggest that they are looking elsewhere for their power, with one in six joining an independent supplier over the ‘Big Six’. This shows an increase of one in eight compared to this time last year.
Interestingly enough, however, Love Energy Savings’ own data has revealed that more people are choosing to remain with the Big Six, with fewer people switching to an alternative supplier. Our data from between the 1st January to 28th June 2016 compared with the corresponding period in 2015 actually shows a slight decrease in the number of people leaving the Big Six.
This could be because the leading energy suppliers have been responding to industry changes and doing more to pass on savings to their customers. One of the biggest changes was the announcement by E.ON at the start of the year, when the company said they would be cutting gas prices by 5.1% for their residential customers, the equivalent of £32 a year in savings. Such moves help to restore the public’s faith in the biggest providers.
What does the future have in store?
The future of the UK is uncertain. Following the result of the referendum to leave the European Union, no one can say for certain how energy prices will be affected.
Some predict that consumers could benefit from the UK leaving the European Union, given that the Leave campaign promised to reduce VAT on household energy bills, something that is imposed by Brussels. It is thought that this would save the average bill payer approximately £60 a year. If wholesale gas and oil prices fall again, energy users could benefit, as the heaviest energy users would become more competitive with overseas companies.
But there’s still a great deal of uncertainty about the UK’s wider economy and what sort of energy trading agreements we will be able to form following an exit from the EU. The future of the country’s nuclear power industry is at risk (you can read more about nuclear power here). This is particularly true for the Hinkley Point plans and other future initiatives if we struggle to secure loans from the European Fund for Strategic Investment and the European Investment Bank.
As we move into the future, it is essential that both domestic and business energy customers do what they can to keep their bills as low as possible. Whether that’s through switching suppliers or taking even the smallest steps towards being more efficient, Love Energy Savings encourages you to take control of your energy anyway you can.
For more advice on how you can protect yourself against high energy bills, please don’t hesitate to get in touch with our team of experts.