The end of 2015 has shown that gas and electricity prices in the UK have hit a five-year low according to energy market analysts. The cost of energy on the wholesale market has fallen to £36.76 per megawatt hour in the Power Index research by ICIS – market information provider. ICIS have said that the causes for the drop are because of the gentle winter we had and the low global commodity prices.
There is a lot of pressure on top of the six UK energy providers urging them to cut their prices in line with the fall in costs. MP, Amber Rudd replaced the previous Government Energy Secretary last year. Shortly after she took over she contacted the six suppliers asking if their prices would reflect the wholesale market. They responded by explaining that they are operating in an extremely competitive market.
Back in August British Gas, one of the six reduced their gas prices by 5% however the other 5 did not copy. The executive director of Which? Richard Lloyd has said these costs should be passed onto energy users;
“It’s extremely disappointing millions of us are still paying way over the odds for our energy. Consumers will rightly ask why their bills haven’t been cut dramatically when wholesale costs have dropped
“The government needs to protect vulnerable customers from being ripped off and make people feel confident about switching supplier.”
How is this affecting small businesses?
Gas and electricity prices have a significant impact on businesses and the economy – both on a commercial and consumer level. Small businesses are particularly disturbed by the fluctuations in energy prices because their profit margin decreases as the prices increase. Energy costs for small and medium-sized businesses all stack up and prices can have a large impact on cash-flow particularly for business owners who might consider taking on more staff and moving into larger premises.
Head of Businesscomparison.com Philip Brennan has commented;
“It can be very difficult for small businesses to adjust when prices and costs of essentials increase, especially when they are not expecting it. Gas and Electricity are key to running a business, without them an enterprise cannot function and that is why it is so crucially important for businesses to save money on their everyday necessities. If more businesses are proactively switching using comparison services such as ours, then this will put more pressure on Energy suppliers to be more competitive with their pricing. We offer a comparison journey that helps businesses make the right decision and save money in a matter of minutes.”