After a sustained period of enduring price hikes, all UK residential energy users will be relieved to find that wholesale prices are falling. However, their bank balances are not reflecting the positive development, a disparity that the Conservative party has been quick to point out.
A combination of atypical warm weather for the winter and improved supply and storage infrastructure has led to a significant and sustained fall in wholesale energy prices in the UK.
According to Reuters, spot gas prices have fallen to 26p per therm, a mere fraction of what they were for winter 2005, while forward prices for summer 2007 have fallen 0.80p to 25.70p and winter 2007 is down 0.50p at 43.55p.
Power prices have also fallen on the back of ample spare capacity. Baseload power for immediate use dipped about GBP1 to around GBP23.50 per megawatt hour, while February’s price fell to GBP32 and March’s to GBP30.20, Reuters reports.
Yet, after a year in which most UK suppliers increased their prices twice, end users have not seen a reduction in their tariffs on the back of the recent deflation to wholesale costs.
This is a phenomenon that the UK opposition party has leaped upon to attack the current government. Accusing the Labour government of not caring, Conservative leader David Cameron has called for an inquiry into why customers’ bills have not fallen in accordance with the wholesale price fall. The move comes as the Tories launch their Live Life For Less campaign.