Electricity and Gas Supply Market Indicators

Ofgem produces regular snapshot estimates of the net margin on supplying a typical, standard tariff, dual fuel customer.

Previously these estimates were provided in a quarterly Supply Market Report.

However we will move towards updating this information on a weekly basis via our website, and will begin the process of making this change following publication of this report.

Our latest calculations show that the net margin for a typical, standard tariff dual fuel customer is approximately £100 per customer for the year from January 2011. This represents a £5 reduction from our previous quarterly report in December 2011.

We expect this margin to fall further to around £70 over the next six months, partly as the recently announced electricity and gas price cuts from the ‘Big 6’ take effect.

However there are many uncertainties, not least wholesale prices, which could affect this figure. The 12 month rolling average net margin is £80, which is an average of the previous 6 months, the current month, and the next 6 months’ net margin data.

A detailed decription of the rolling average net margin indicator can be found in our method statement.

British Gas announced a 5% cut on the price of its electricity effective from 12th January. This has reduced the average bill of a ‘Big 6’ standard tariff dual fuel customer from £1,355 in December 2011 to £1,345 in January 2012*. The other suppliers’ price cuts will be factored into subsequent weekly updates as they take effect.

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