The cost of energy for suppliers is up 15% compared to January 2016
This is illustrated by Ofgem’s Supplier Cost Index, which tracks ongoing trends in the electricity, dual fuel and gas markets.
The regulator says the increase is primarily as a result of rising gas and power wholesale prices, of which there was a considerable rise in October and November, before falling back slightly in December.
These changes happened due to tighter forecast capacity margins in power generation, higher wholesale prices in the French market and higher commodity prices, particularly coal.
The recent rise detailed above follows a long period of falling costs between the start of 2014 and early 2016. They began to steeply pick up in the second half of 2016 but still remain lower than they were two years ago.
Small suppliers can be quite significantly affected by these fluctuations in the market – larger companies are more insulated against instability as they often buy energy in excess of two years in advance, meaning changes in cost take longer to have an effect.