The rise of the bills: the great energy rip-off at a glance

The graph below shows the price of wholesale gas (the price energy companies buy it for) and retail gas prices (the price the customer pays).

One of the first things you will probably notice is how rarely the retail price of gas has gone down even when the wholesale price has come down.

There are complicating factors of course. When buying wholesale gas and electricity, energy suppliers employ hedging strategies (spreading the costs to consumers across a long period of time instead of passing on costs and savings).

This should mean that bills average out in the longer term, giving consumers a retail price that’s reflective of the state of the wholesale market.

And yet it doesn’t feel like that.

British Gas put up prices by 6% last year, despite the level of profit the company was already making (see bar graph below) – because “external costs were growing“.

Commenting on the latest anticipated price rise, shadow energy secretary Caroline Flint said: ‘Only a few months ago they [British Gas] decided to put prices up, event though their profits have gone up extremely well in the last year.’

We don’t see the reverse happening,’ she said, before calling for the introduction of a tough regulator to ensure that savings in wholesale gas prices were passed on to customers.

British Gas, the rise of the bills
Source: USwitch

Date	Annual Bill Size
Jan 2004	£543
Jan 2005	£642
Jan 2006	£735
Jan 2007	£1,002
Jan 2008	£821
Jan 2009	£1,176
Jan 2010	£1,066
Jan 2011	£1,100
Jan 2012*	£1,260
Jan 2013	£1,336