UK Wholesale Electricity Prices Highest for 17 Months
Despite the slowdown in the economy and the great summer weather the UK is enjoying demand for electricity and the price has reached a 17 month peak this month.
Earlier in the year the demand for electricity for UK customers was around 5% lower than last year mainly due to people cutting back. And although electricity prices have remained stable for a couple of years now the wholesale price also reached the highest level since 12th February 2009 according to new research just published.
Demand for air conditioning fuels demand and prices
Normally peak demands for electricity and gas occur during the cold winter months because of the need for additional lighting because the day light hours are shorter and the need to heat homes and businesses but this year has seen a big demand for air conditioning and fans as the hot summer weather has continued.
There are additional issues in France – because most of their power is generated from nuclear power the water used to cool the power plants is warmer than normal so these generators are not operating at their maximum potential and thus demand for other sources has increased as well as their pricing which is the highest since March.
Consumers need not worry – for now
Although the wholesale prices have peaked this week it is not thought that this will directly affect home users and businesses because it’s unlikely that this demand will continue for much longer and the wholesale prices will likely reduce. However, if the demand for electricity and the warm weather continue into the beginning of the winter period where demand starts to pick up in any case then we may see increases in tariffs from the UK power companies.
What should you do with your current tariff ?
If you are already on one of the special deals from one of the main energy companies it’s still probably got some months or years to continue and many of these have penalties for exiting early in any case. If you are at the end of a contract and are looking to compare electricity prices then now may be a time to fix your rates if you can find a fixed tariff that has prices that are comparable with some of the discounted rates.
Generally there aren’t many fixed rate tariffs in the market place currently and most are on variable rates although these haven’t increased much over the past few years although there were big increases a couple of years ago. If you are wondering what to do our advice at the time of writing is still to stick with a discounted variable rate tariff at least for the coming months. Keep an eye on the press on what is happening to prices to see if the wholesale price continues at this level. As the warmer weather is less hot currently these rates are also likely to fall over the coming weeks. Energy companies only increase (or decrease) their tariff rates after a sustained period of higher (or lower) prices in the wholesale market and at the moment this has not happened.