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Energy Prices over time

The simplest way to illustrate a price movement over a period of time is to set a base.

Using a base of ‘100’ to represent the price of energy in 2005 we can deduce the following:

  • In 2000, at the turn of the millennium, the ‘price’ for Coal, Electricity and Gas were 80.4, 85.6 and 48.2 respectively.
  • In 2012, using the same methodology, Coal had surged to 140.3, Electricity to 151.6 and Gas had experienced a staggering more than three fold increase to 141.0.
  • By 2012 Coal and Gas constituted over 65% of the generation sources for electricity and the use of gas as a direct energy source grew 10% to 550 TWH.

Given this it is no surprise that the impact that these huge price increases have on business energy bills has been severe.

If we take a closer look at the post 2010 market we can see this impact borne out in the p/kWh cost of electricity.

Given in normal circumstances the raw electricity cost makes up 44% of the average bill, the influence of rising prices on our bills therefore is clear.

In the three years to 2012 the cost of raw energy has grown from 4.6p/kWh to 5.4p/kWh.

Along the way this has peaked at 6.25p/kWh in April 2011.

Needless to say a 17% increase over 3 years is well above the price of headline inflation. And the peak to 2011 is a staggering 36% increase in just over 12 months.

To put this into context an average business energy customer in 2010 would have paid £2,555 for their yearly energy usage, by 2013 this had become £3,000. And if you’d contracted at the wrong time in 2011 it would have cost your business £3,470. A near £1,000 increase. Big numbers.

Taking a remote view, the rise in prices looks almost linear and it is therefore easy to believe that if you didn’t get in at the bottom then you’ve lost out.

However even in a rising market there are opportunities to strike an advantageous deal. The wise approach is to not despair that prices only go up but to strike when a deal, within the context of the overall market, is there to be done and worth doing.

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