It’s been a bit of an adventure since we started Igloo energy earlier this year and as we near Christmas we wanted to thank each of you for being part of that journey, its great to have you onboard. With plummeting temperatures over the recent weeks, winter is now well and truly underway and heating usage now typically becomes the biggest part of your energy bill.
You may have seen recent news on changes in the wholesale cost of electricity and gas caused by the colder than expected weather and also some unexpected incidents in two main pipelines. As a result, wholesale gas prices have increased significantly in recent weeks and are now substantially higher than when we last reduced our prices in July.
Because we only operate one tariff – our Igloo Pioneer variable tariff, we want to keep you updated on what’s happening in the wholesale markets so you can understand how and why our prices might change in future. Our priority is to help reduce your bills through helping you save energy with innovative products and services in combination with our aim to deliver an always competitive tariff. While we’re not the first in the market to provide updates on what’s happening in the wholesale market, we think it’s a good trend to follow and something all energy suppliers should do.
Wholesale energy prices have increased by 33% since July, but we’re not changing our prices just yet.
The last time we changed our price was in July 2017, at that time the energy market had recently dropped from a short spike in May and gas prices were trending downward. At that time, we cut our prices by 5.2% for electricity and 12.8% for gas. You can see how the average Igloo annual bill has compared below to our average cost of wholesale gas and electricity since that date.
Short term price spikes have recently been caused by a colder than expected start to winter & incidents in two major pipelines
You may have seen recent news about two major incidents relating to pipelines that supply oil & gas to Europe. These were:
- Forties pipeline – A major UK oil & gas carrying pipeline sprung a leak with a small hairline crack. The original impact was expected to be limited, but further investigation identified that it was likely to be closed for longer than expected while repairs were carried out.
- There was a tragic accident at a Gas processing plant in Austria – an explosion of the Baumgarten processing plant in Austria resulted in 18 people being injured & the death of 1 person. It is a major route for imports of Russian gas into Europe and drove an immediate short-term spike in Gas prices of more than 50% as the market became nervous of continued supply difficulties. Since then, prices have stabilised back to the level we saw before the accident.
Along with some smaller reductions in supply from a few key gas fields & storage providers, we’re continuing to see gas prices remain higher than we all first anticipated earlier in the year.
Electricity prices are also driven to a lesser extent by changes in the gas price. Around 35% of the UK power generation is produced by gas turbine plants. As a result, as gas prices increase so do the gas prices the power stations pay to generate electricity.
What does this mean for me?
We don’t have any immediate plans to increase our prices, though if things continue we may have to early in the new year. Should we need to change them, we will always give you 30 days notice of any increase and we’ll never charge exit fees so you stay with us because you want to, not because it’ll cost you money to leave. Through innovative products & services, we’ll do all we can to help mitigate any increase too.
A good example of how we might help reduce any impact is our recent promotion with Tado for one of their clever smart thermostats – you could save up to 31% on your heating bills and earn £30 cashback on your energy bill. Find out more here.