In this blog we’ll outline what’s been happening to wholesale energy prices, and explain what this means for you.
At a glance
- Electricity wholesale prices have risen by 61%, and gas is up 56%
- Pure Planet remains competitive, with our Fixed tariff up 19% from last year
- Our Variable tariff is £144 cheaper than the Ofgem price cap.
It’s been one hell of an extraordinary year, frankly. A lot’s changed: back in April 2020 we were a few weeks into our first lockdown, our kitchen tables had become classrooms and offices, and Donald Trump was the President of the United States. Twelve months on, and a few lockdowns later, there’s finally some vaccine-inspired light at the end of the pandemic tunnel as things begin to return to something like normal, or at least the ‘new normal’ here in Britain.
And it’s these changes to the way we live, learn and work that are contributing to the increasing cost of energy, not just at Pure Planet, but across the supplier market.
Electricity consumption among Pure Planet Members has increased by 7% on average since the first lockdown – we assume because more people are working and schooling from home. This has a knock on effect on bills: the more people use, the bigger their bills – and that’s before any price rise is taken into account.
What’s happened to energy prices?
They’ve gone up. Electricity wholesale costs have soared by 61% and gas is also up by a similarly steep amount at 56%.
Let’s have a look to see what’s happening to prices at the moment:
- The price of wholesale electricity for the coming quarter is up 74% on where it was this time last year, and gas is up 80% – electricity now costs £63.92 per MWh (vs £36.72 in April 2020), and gas 52.71 p/therm (vs 29.23 p/therm in April 2020)
- And looking slightly further ahead, the price of wholesale electricity for Winter 2021 is currently looking up to 61% higher, and gas up to 56% higher.
All of this has meant that retail prices have climbed too – right across the market.
There are a few factors that have contributed to the rise in energy prices. As a general rule, the price of energy goes up when there’s more of it being used – in the cooler winter months, for example. But, with a global pandemic to contend with, it will come as little surprise that 2020 was an exceptional year. Wholesale prices declined in early 2020 and concerns about economic output and the impact of Covid helped keep prices relatively low through to the end of the year. However, as it became clear that vaccines were looking likely to help plot a course out of the coronavirus crisis, so the expectation of increasing demand for energy began to be reflected in prices. As the strength of that conviction has increased, we’re seeing that surge reflected in the cost to buy wholesale energy.
Image: Wholesale cost increases of electricity and gas over the last 6 months
Another important factor impacting prices is a rise in non-commodity costs, which make up a large part of your bill. These costs cover getting energy to your home and other regulated policy and environmental costs. These are set by our regulator on the back of government policy and are beyond our (and all suppliers’) control.
What does this mean for Pure Planet Members?
We have to adjust our prices to fit the wholesale market costs for energy as well as the levies that are imposed by the government. Unfortunately, as things increase, so must our retail tariffs.
Our Fixed tariff price is currently up 19% on average, that’s lower than the wholesale market during the same period. We’ve done, and will continue to do, our very best to offer great value for money by being as efficient as possible.
If you signed up to our Fixed tariff in spring 2020, well done! You bought into fixed just at the right time, and shielded yourself from the rising costs during the last year – isn’t hindsight a beautiful thing? Of course, it also means that as you think about your next tariff, you’ll see prices are higher than they were this time last year.
If your fixed term with Pure Planet is due to come to an end soon, we’ll email you 50 days before your tariff ends to explain what happens next. You have the option to:
- Choose one of our new 100% Green fixed tariffs
- Move to our 100% Green variable tariff – you’ll automatically be switched to our great-value variable tariff if you do nothing at the end of your contract
- And of course, you’re free to switch suppliers. But we really hope you won’t. We hope you’ve enjoyed being part of Pure Planet and the 100% renewable electricity which has been powering your home. And don’t forget, if you’re on the gas grid you’ve been enjoying fully carbon offset gas too.
It’s worth bearing in mind that, if you choose to move on to our variable tariff, it’s still well below Ofgem’s energy price cap. Our variable tariff is currently £144.07 cheaper than the cap for average, dual fuel Members. Remember though that variable prices can move up or down, unlike with a fixed tariff which locks in the kilowatt hour rates for the length of the contract.
How does Pure Planet compare to other suppliers?
We’ve always offered great value versus other suppliers in the market. And that’s not changing.
If we take a look at price relativity across the market from April 2020 to April 2021, we can see that prices have been steadily increasing, but also that Pure Planet has consistently remained one of the cheapest options.
In the graphs below, we’ve compared both Pure Planet’s cheapest Fixed and Variable tariffs against the average of the cheapest Fixed and Variable tariffs across the market. In both instances, you’ll see that we’re still offering some of the very best value in the market.
The white band represents the spread of prices in the market of our sample from cheapest to the most expensive; the line is Pure Planet’s position. You can see it is consistently at the lower end, reflecting our ambition to always provide excellent value for money. We may not be the very cheapest at a particular point in time but we aim to be there or thereabouts.
Image: Fixed tariff comparison Pure Planet compared against British Gas, E.ON, Scottish Power, npower, SSE, EDF Energy, Octopus Energy, OVO Energy, Utility Warehouse, Shell Energy, Bulb, Green. So Energy. Outfox the Market, People’s Energy, Igloo Energy and Avro Energy.
Image: Variable tariff comparison Pure Planet compared against British Gas, E.ON, Scottish Power, npower, SSE, EDF Energy, Octopus Energy, OVO Energy, Utility Warehouse, Shell Energy, Bulb, Green. So Energy. Outfox the Market, People’s Energy, Igloo Energy and Avro Energy.
It’s worth remembering that, if you use a price comparison website to check how different suppliers compare, they often won’t show you your current supplier’s tariffs – that way you’re more likely to switch, and they’re more likely to get a commission. So always check the estimated annual cost of the tariff you’re considering against ours to see if you’d be better off sticking with Pure Planet.
We’re proud to offer some of the cheapest green energy in the UK – that means you’re getting 100% renewable electricity and 100% carbon offset gas. We’re also a Which? Recommended Energy Provider 2020, so you can expect great service from our team.
And, in the next few months we’ll be introducing something new and very exciting to our award-winning app – it’s all part of our commitment to helping our Members reach net zero.