Higher Electricity and Gas Prices Ahead ?
Although this week has seen a spate of price reductions from most of the energy companies Centrica management has warned that higher prices are likely in the years to come.
Centrica who own British Gas have said that it’s most likely that domestic customers and business users will see prices for both electricity and gas increase in the medium and longer term because of investments required in the UK and the volatile wholesale energy market.
In the past few years many energy companies have hedged the price of energy so that the rewards are being felt now and this helped the giant generate a 51% increase in profits but changes in the market place and the requirement for improvements in renewable energy sources may see higher prices ahead.
The news comes on the back of the announcement that on average energy companies in the UK now make £105 per customer per year which is a massive increase from the £75 made last year and the industry regulator wants this margin to be reduced so that any savings made from the whole market are actually passed onto the end customer whether they are in homes or business related.
More investment means lower margins and higher bills
The government and ofgem have set targets so that each home in the UK will be fitted with a smart meter by 2020 and that millions of homes will also need to have loft and cavity wall insulation fitted. This huge investment is not being made by home owners but the energy companies themselves and of course that cost can only be passed onto the end customer so in effect we will all end up paying for the government plans.
To prepare for this investment British Gas is now heavily recruiting installers and aims to have an additional 1,100 people fitting insulation products and 2,600 people to fit the smart meters in homes across the UK.
Hiring staff with the technical knowledge will not come cheap although by fitting insulation in home will cut the consumption requirements of homes so perhaps this will slightly dampen the requirement for consumption of energy. The fitting of smart meters will mean that the data for energy usage is transmitted directly back to the company who manages your supply so you will never have someone reading your meter again and that will be the end of estimated bills at long last.
Additionally you’ll be able to see your consumption figures on your utility provider’s website or using some other form of desktop software so you can manage your own usage. Research suggests that just by doing this you should be able to shave around 10% of your energy bills each year.
As we see more press related stories in this arena you can only think that the publicity being generated is purely because prices will have to rise and the companies are paving the way with these early enough so that they don’t hit us when we least expect them. Should you fix your prices now ? Well we don’t believe that should be the case.