Like electrical power, gas costs depend upon how and when you purchase it. The most recent day-ahead price for gas is 38p per Therm. And if you're wondering, one Therm is equal to 29. 3 k, Wh. In the graph listed below, you can see how gas and electricity costs have changed over the past 3 years.
Source: Want to see how your bill compares to everybody else's? Read our guide to the average gas and electrical energy price in the UK. As we mentioned, suppliers use various methods to purchase energy in the wholesale market from years beforehand, to the day in the past. Part of the obstacle for providers is predicting when energy will be cheaper and just how much they'll need, so they can buy the correct amount at lower rates, to provide consumers a better deal.
This indicates they increase or down depending upon just how much there is to sell, and the number of individuals wishing to purchase it. In the UK, the price of electricity is partially linked to the price of gas. This is due to the fact that we use gas to generate electrical power so the rate of electrical power tends to increase or down, in line with gas costs.
This leads to lower wholesale prices, especially sometimes where there's low need. Gas rates as electrical power costs are partly driven by the expense of gas, this suggests that the rate of gas affects wholesale rates overall. If gas rates increase or down, so does the cost of electrical power. Bulk LPG.
This suggests we can buy it from elsewhere when our price is higher, and sell it when the rate increases in neighbouring countries. Over the previous few years, the rates of gas and electricity have actually been mainly going down. There are a few reasons for this: From completion of 2018, there was a worldwide surplus of gas the UK purchased up a great deal of this surplus, that made it less expensive (Switch LPG supplier).
This has actually implied less demand for gas, therefore the price has decreased. Covid-19 has actually caused a decline in activity and energy use. This has also meant we require less energy, so there's been less need. This trend is now beginning to change, as energy costs begin to recuperate to levels much like before.
Wholesale costs have in fact resulted in less expensive bills over the previous year or 2. In October 2020, Ofgem lowered the rate cap for providers by 84 a year, making it the most affordable it's ever been! That lower rate was because of the reduced demand for energy caused by Covid-19, which resulted in lower wholesale rates (Switch LPG supplier).
As you can see in the chart below, from 2017 to 2018, fuel rates were climbing and it was only our minimized energy use that kept the typical bill cost reasonably stable. The bright side is: as more people make our homes more energy-efficient, we'll need to use even less energy.
At OVO, we're devoted to providing a good deal for our members, while assisting them make small modifications to live a greener lifestyle. We see the wholesale markets carefully, buying energy when it's cheapest, so that we can get the very best offer possible and we pass these savings on to our members.