Day to day, few consumers have much change since the historic result of the EU referendum on 23rd June. The blow has been cushioned for most, bar the impact on the number of Euros they can afford to spend on holiday.
Whilst some have been impacted by the closure of vulnerable businesses, in the main the predicted hammer blows to the economy have yet to be felt. However, when consumer energy bills roll in they will tell a different story.
Behind the scenes the weak pound has sent energy prices to a nine-month high. How can the consumer predict what is going to happen to their fuel bills in the coming months and what can they do to protect themselves against higher fuel bills?
Wholesale price hike
The unstable market, weak pound and worries about supply have meant a in the cost of wholesale energy. The cost of British energy reduced for those energy traders dealing in euros from the very morning of the referendum result. Gas markets saw a huge increase in demand from the moment the market opened that day, as traders could buy so much more energy for their euros. The increase in demand caused the cost of British energy to rise. At the same time, the cost of importing energy from Europe increased.
Those costs are already being pushed forward onto the consumer. USwitch has noted that twelve energy suppliers have already pulled their excellent value dual-fuel tariffs. An even higher number of low cost energy tariffs have been pulled, a process that started at the beginning of June. Extra Energy’s replacement tariffs cost £105 more per annum, with Sainsbury’s Energy increasing by £94 and OVO by £63.
Not all bad news
It should be remembered that consumers have enjoyed record low cost energy for the last three years, so a transition back to more ‘normal’ levels is bound to come as a shock. But it is not all bad news. The lowest cost fixed-rate deals are still about £100 less than they were a year ago. By shopping around and taking advantage of smaller energy supplier tariffs, consumers can still save a substantial amount. The Big Six are charging up to £315 more on a like for like basis, increasing further the already burgeoning interest in smaller suppliers.
There is a market opportunity opening up and some great small suppliers are filling it. The lowest cost tariff available currently is an impressive £763 per annum, from Octopus Energy, which has the advantage of providing some of its energy from wind farms and solar units. Flow Energy has a similarly appealing annual tariff of £752.
There in no doubt that uncertainty in energy trading is set to continue for some times, with the result that wholesale energy prices will fluctuate. Consumers are best advised to shop around hard, using USwitch to compare prices. More and more people are jumping ship from the Big Six, and reaping the rewards.