Why we need to increase our prices

It’s been a year of uncertainty, the pandemic has changed the way we live, Brexit has changed the way we trade and to top it all off, it’s been a cold end to the year. All these things have one thing in common... they push up wholesale energy prices. 

Since we last wrote to our customers in September, energy wholesale market costs have risen by more than 30%  

Market vs Igloo prices Jan 2021

In April we dropped our gas prices by 25% when wholesale prices dropped, since then market costs have continued to rise. At the beginning of October, we increased our prices in the hope that we could minimise the long-term impact of these rising wholesale costs.  While we’ve absorbed the further increased costs over the festive period, we now need to increase our prices once more. From the 8th February 2021, we will be increasing prices by 9.1% for a typical Igloo dual fuel home

This is not a decision we take lightly. We believe in keeping things simple with a single flexible tariff so every customer knows they’re on our best deal. If and when the market improves, this approach will allow us to react quickly and pass on savings in the future, as we did in April last year.  

In this article we will explain how the cold weather, the pandemic and Brexit are affecting your energy bills. 

Cold weather 

Over the past few months, the northern hemisphere has experienced colder than expected temperatures, this has increased demand for gas across Europe and Asia. 

When purchasing gas, the UK is in direct competition with Europe for North Sea gas production and with Asia for US Liquid Natural Gas (LNG). As the demand for a limited supply of gas has increased, so does the wholesale market price. 

The knock-on effect of this is that we see more shipments of gas are being diverted to Asia and Europe, reducing the supply of gas that is landed in the UK. This puts more pressure on supplies we already have in storage. As we heat our homes, the volume of gas that we have available to us is decreasing.  

Demand has increased, supply has decreased and as a result the wholesale market cost of gas has gone up. 

Finally, along with the cold weather, the UK has been less windy than normal, as a result we have had to rely on more expensive fossil fuelled power stations, 40% of these using gas, also pushing up the price of electricity. 

Uncertainty caused by the pandemic and Brexit 

The energy market reacts poorly to uncertainty, it likes to know what to expect. 2020 has not been a year for stability, here are a few of the things impacting your bills:


The UK energy market is strongly linked to Europe, trading energy with countries such as France, Belgium and the Netherlands, this has impacted the price you pay in a few ways:

  • Trade - Uncertainty around the arrangements for the import and export of energy has resulted in extremely high advanced prices for at least the first three months of next year. We hope that the trade deal between the UK and EU will begin to bring some stability but until the details become clearer and the market adapts to a new way of working, we expect this to continue to negatively affect prices.

  • The pound - The strength of the pound is very important. As the value of the pound has weakened, the relative price of energy we trade internationally has gone up, increasing prices.

  • Carbon - Producing carbon costs money as producers are charged for the amount of carbon dioxide they release into the environment, this directly effects the cost of energy production. The price of carbon has increased due to a recent EU treaty to limit carbon emissions to 55% of 1990 levels by 2030. The UK plans to start its own post Brexit emissions trading scheme in 2021 but until this has been defined, the extra uncertainty will continue to impact prices.

The pandemic

The pandemic has changed the way we live, work and play and as a result everything we use to know about how the country consumes gas and electricity has changed. This has made it more difficult for the industry to plan ahead, creating a more volatile marketplace, pushing prices up.

More details about how the pandemic has affected your prices can be found in our blog from September

We’re here to help

It has been an unprecedented year, with all the factors we’ve discussed in this article acting to push up both gas and electricity prices. We recognise that this is an incredibly challenging time for many of our customers, if you have any questions our customer care team are here to help