Energy bills on the rise despite fall in gas costs
Wholesale gas prices fell to their lowest level of the year on the day that energy company E.ON announced its latest hike in bills.
E.ON, which has about five million customers in Britain, became the latest of the big six energy suppliers to increase its bills when it announced that prices for gas and electricity will rise by 18.1% and 11.4% respectively from September 13.
When E.ON made the announcement on Friday, wholesale day-ahead gas prices had dropped to their lowest point of the year, at 49.9p per therm, the Sunday Telegraph reported. And electricity prices sunk to their lowest point two days previously, at £45.2 megawatts per hour.
The supplier followed British Gas, Scottish Power and Scottish -amp; Southern Energy in announcing price rises in recent weeks, which the industry blamed on a 30% rise in wholesale costs since last winter.
There have been repeated calls for the sector to be referred to the Competition Commission amid allegations of unfair rises.
A series of events created a "perfect storm" for energy prices earlier in the year, after the Japanese earthquake and tsunami put nuclear reactors out of action, unrest in the Middle East drove up energy prices, and Germany decided to exit nuclear power.
But gas has fallen by 22% and electricity by 19% since their March peaks amid the slowdown in the global economy.
The companies buy their wholesale gas and power a long time in advance but the price of buying ahead is also at five-month lows and still falling.
Omar Rahim, of Energy Trader Daily, said: "The wholesale electricity and gas markets have fallen consistently since March, this is not something that has happened suddenly. It's ironic that on a day when suppliers are again raising their prices, gas prices are at a year low and electricity prices are also at multi-month lows."
Energy companies have recently been urging customers to fix their energy prices for the next year to shield them from further rises but if commodity prices continue to drop it could mean that millions are locked into high tariffs.