Posted by Jake on Tuesday, October 18, 2011 with 8 comments | Labels: Article, Cameron, Comment, energy, Graphs, Liebrary, OFGEM, politicians, regulation
Another addition to our Liebrary: How is it that our leaders, including the well coiffed Cameron and the buff Huhne, are so poorly briefed about wholesale energy prices?
So poorly briefed that Cameron and Huhne went to a high profile showdown to 'get tough' with the Big Six energy companies and come away mesmerised by the idea that retail prices are driven up by wholesale prices? Coming away preaching that the solution is for us all to wrap up warmly and search the internet for a lower tariff:
"We should be switching if we're not on the cheapest tariff and taking the opportunity ahead of this winter to really make sure that we're insulating so that we can save money."
Graphs from Consumer Focus, the soon to be axed "statutory consumer champion for England, Wales, Scotland and (for postal consumers) Northern Ireland", show the truth.
Wholesale prices have indeed risen in recent months. But that follows an even bigger fall in the months before that. Which all left wholesale prices well below their 2008 peak.
On the other hand, the average retail price rose with the peak in 2008, failed to fall as wholesale prices plummeted throughout 2009, and now starts rising even above the 2008 peak.
Electricity Prices - Wholesale vs Retail (graph from Consumer Focus, updated upto 2014)
Gas prices - Wholesale vs Retail (graph from Consumer Focus, updated upto 2014. Consumer Focus commented "For the second time in the last few years, average consumption levels for both fuels were revised downwards in late 2013 by Ofgem. This accounts for the “fall” in the retail gas price despite all suppliers putting their unit prices up.")
See the full Consumer Focus article - click here [NOTE: The government closed down Consumer Futures as of 1st April 2014. As far as we can tell, this graph is no longer maintained]