The prices for renewable electricity and carbon offset gas are falling at Pure Planet. We’ve announced new cheaper rates today. These will take effect for every single existing Pure Planet Member from 1 May. Everyone is getting cheaper energy.
On average, our dual fuel Members will see an annual saving of £50 a year. Higher users will save more; lower users will save less — it all depends on your personal usage pattern, of course.
In general terms, the price of gas is falling by just under 8% on average and electricity costs are being trimmed by 1% on average.
The new rates mean an average dual fuel bill will be £902 a year, according to the new Ofgem definition for a medium profile, which is equivalent to someone who would use 12,000 kWh of gas and 2,900 kWh of electricity every 12 months.
This is £225 cheaper than the regulated price cap of £1,127, which is within a pound or two of where most of our Big 6 competitors price their variable tariffs. So Pure Planet offers exceptional value against the old brands and we beat the variable rates of more modern rivals such as Bulb and Octopus, too.
An Ofgem higher user — someone with a family home, say — will pay £1,237 on average.
You can see our new rates, by region, here:
Why are tariff prices falling?
The main reason is that the costs of wholesale energy prices have been falling for both electricity but mainly for gas for much of the past year.
If we look ahead, prices that are being quoted for gas for the next quarter are a third cheaper than they were at the start of the year — there is always a seasonal drop to take into account here though. If we look further ahead, the wholesale prices for gas for the fourth quarter of the year — October, November, December — are 23% down on what was being asked in January.
With such large drops in wholesale rates, you might wonder why retail rates aren’t dropping as much?
Photo by Rodion Kutsaev
The answer is the kWh rate we all pay as consumers is made up of other regulated costs over and above the actual utility cost itself.
The cost of gas itself makes up only around a half of the overall cost you pay at the moment. The cost of the actual electricity used to power your home is also small — at just over a third of the overall pence per kWh rate you pay. The other portion of the charges include transmission, distribution and policy costs, which have been increasing.
Slow growth in Asia since the middle of last year helped drive gas wholesale prices down initially, as has — more recently — a warmer than usual winter. A recent squabble over the cost of a barrel of oil between Russia, Saudi Arabia and the United States of America, which also put downward pressure on energy prices, has just been settled.
But this has been massively compounded by a change to the whole global economic outlook as the world became affected by Covid19. Global lockdown has dramatically reduced industrial consumption for energy. And although domestic use of power and gas is up around 5% on average this hasn’t been anywhere near enough to offset the industrial drop off. As we enter the warmer months, gas consumption will fall further as heating in our homes is turned off. Already, above seasonal normal temperatures in April also lowered short-term wholesale prices.
There are early signs of some countries beginning to allow some parts of the economy to reopen: which may start to push energy prices back up as demand increases. These are early days, and energy pricing on the wholesale markets remains volatile.
What does it mean for me?
Every Pure Planet Member will get an email over the coming days. It explains how much you’ll save depending on your usage. Your Direct Debit won’t be altered at this stage, unless it is being reviewed, but this will be checked over the coming months.
It’s worth remembering that the amount you pay out on your Direct Debit has already fallen by a third to your warmer months payment level. This makes sure your account stays in balance throughout the year with payments matching higher use in winter and lower use in summer.
All of your electricity at Pure Planet is matched 100% with power created by renewable sources and all gas is completely carbon offset. Pure Planet aims to offer consistent good value.
Looking after each other
Coronavirus is changing so much. So many — too many — people are suffering the loss of loved ones. And it remains a very personal financial crisis for many. If you need support or get into money difficulties during this time, let us know. We will do what we can to help. Log into your Pure Planet account, tap ‘Get help and support’, and ask WattBot for “help with payments” and we’ll guide you from there.
Citizens Advice is also available to everyone and offers free guidance on financial issues.
Check in with our wonderful Community. You can always chat to fellow Pure Planet Members online. We have some kind and generous Community Members who will always jump in to help others out. You can also troubleshoot in our FAQs section.
Ofgem, the energy regulator, has also provided an update on Coronavirus here.