Electricity Rate Information
Ofgem monitors the UK energy markets and by encouraging competition between suppliers they try to ensure that the customers get the best deal. However, energy prices are constantly on the rise and even after conducting an investigation into this, Ofgem were unable to find a solution and predicted that prices may continue to rise in the future.
Energy prices have recently increased due to rising wholesale costs, with a 20% rise in both gas and electricity prices in 2004. This is due to a depletion of UK sources, which then increases the wholesale costs as more imports are needed. Most of the UK’s electricity is produced using gas so these price rises affect electricity prices too.
Price increases are imposed by the major energy suppliers who insist they have to put prices up but you will find that prices vary greatly between suppliers.
In the electricty market there are a number of different suppliers. Before 1999 people used their local supplier but since then customers have been able to switch suppliers so competition has become fierce.
Local electricity suppliers have to charge a certain amount in the local area they cover but they are able to supply other areas at a different cost. This rate will often be less than the standard rate in order to encourage new customers in. Therefore if you are supplied by your local electricity company, you could be paying more than households being supplied by the same company in a different area.
Due to this competition, it has become popular to switch suppliers and in this case, the local supplier is not always the cheapest. The current rate of switching is 37% for electricity and customers are saving substanstial amounts by doing so.