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Cheap gas = Higher bills?

Since March, power companies have seen their gas costs fall by 36%, so why is it that families are experiencing higher power bills?

People have watched their fuel bills increase to more than £1000 this year. According to charities, lives have been put at risk during the colder months with poorer families left with a choice to either keep warm or eat.

Suspicions have risen within the official consumer body EnergyWatch so much so that they are calling for an inquiry into the UK’s big six power firms, these are:

British Gas
Powergen
SSE
NPower
Scottish Power
EDF

The companies have blamed higher wholesale prices for the increase, however, costs have been reduced?

Reductions in costs are largely down to imported gas suppliers from Norway and the Netherlands. Cheap gas, should mean lower bills.

Research by experts at the website theenergyshop.com show the average wholesale price of gas hit a high of 2.55p per kilowatt hour in March this year. Since then it has fallen by 36% to 1.62p.

By contrast, the retail price paid by consumers has risen by almost 26% to 2.956p per kilowatt hour over the same period

The big 6 are saying that they buy their gas 6-8 months in advance, so people should start to see a drop in their bills by summer 2007.

EnergyWatch, chief executive, Allen Asher said:

‘If prices fail to come down it will only add to the suspicion that consumers are not being given a fair deal.

‘We believe there should be a Competition Commission inquiry into whether the market is working. Consumers have had enough of the relentless hammering from energy companies. They deserve to know that everything is being done to sort the problem out. Sitting on our hands waiting for prices to fall is not an acceptable response.’

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