Wholesale gas prices ‘at year low’ on day firm announced rise

E.ON, which has about five million customers, 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 per cent and 11.4 per cent respectively from September 13.

But 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, a Sunday newspaper 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 and Southern Energy in announcing price rises in recent weeks, which the industry has blamed on a 30 per cent 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 per cent and electricity by 19 per cent since their March peaks amid the slowdown in the global econ- omy.

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.

Andrew Horstead, risk analyst at energy specialist Utilyx, added: “If wholesale prices continue to drop, the decision to put up energy prices for households is going to be a difficult PR pill to swallow.”

The average E.ON dual fuel bill for a customer paying with direct debit will rise by 15.2 per cent to £1,190 from next month.

E.ON said almost 600,000 were unaffected by the rise, including its most vulnerable customers on WarmAssist tariffs.

It is the second price rise by E.ON this year after it increased electricity tariffs by nine per cent and gas by three per cent in February.