The market price of natural gas leapt by 15 per cent on Wednesday, after the news broke that a leak had been found in a key Norwegian pipeline which supplies the UK. It could mean yet more bad news for British consumers, many of whom have already seen energy prices hiked twice since the start of 2008, and who may now be facing a third rise before the end of the year.
Joe Malinowski of TheEnergyShop.com, the energy comparison site, says: "The thing that has been driving prices over the past year has been the oil price – which rose from $100 a barrel at the start of the year to a peak of $147. The price has dipped over the past few weeks, and it was starting to look like there might be some relief for consumers. However, the problems with the Norwegian pipeline have thrown a spanner in the works, because clearly it has increased the risk of a disruption to supply over the winter."
Prices first rose at the start of the year, by an average of around 14 per cent for both gas and electricity. The second round of price hikes kicked off last month, when EDF raised its gas and electricity prices 22 and 17 per cent respectively. British Gas followed suit a few days later with a whopping 35 per cent gas price rise, and a 9 per cent increase in electricity prices. And this week, Eon and Scottish & Southern became the third and fourth of the big six to announce a new set of price rises – as much as 29.2 per cent for gas and 19.2 per cent for electricity. It's now only a matter of time before the others follow suit.
With the Norwegian pipeline problems threatening to spark another round of price rises in the next few months, it's still worth considering a fixed price tariff if you're worried that you won't be able to cope with a larger bill.
Malinowski points out that the very best deal currently on offer is from Scottish Power – a tariff that will leave the average household with a bill of around £1,100 for the year, fixed until October 2009. Since the recent round of price hikes, the average household on a standard tariff with EDF, British Gas, Eon or SSE will be spending at least £1,200 a year – which means the Scottish Power deal is already good value, even if there aren't any further price rises over the next year.
Although not as competitive, British Gas, EDF and Eon are all offering fixed-rate deals which can protect you against any further price rises. The downside with these deals is that you won't benefit if prices fall over the coming year. However, if you're concerned that an extra couple of hundred pounds on your energy bill could tip you over the edge, it still may be worth considering.
Even if you don't want to fix, it's worth checking that you're on the best tariff you could be on before the winter begins. Some 70 per cent of the average household's gas consumption is accounted for in the winter months, so switching now could save you hundreds. Websites such as TheEnergyShop.com and Switchwithwhich.co.uk can help you check current prices and offers.
It also makes good sense to think about making your home more energy efficient before the nights begin to close in. Installing loft and wall cavity insulation, along with double-glazed windows, can help you make big savings on your energy bill. For more information on how to make your home more energy efficient, visit www.energysavingtrust.org.uk.