Hot air rising

With the cold weather upon us, it's time to wrap up warm and turn up the central heating but with rising energy bills, how much is it going to cost to heat your home this winter?

Start of one freeze, end of another

British Gas has recently announced the end of the 'prize freeze' on its most competitive tariff. The provider froze its prices on its online Click Energy tariff on 4 September but is lifting the prize freeze from January 8, making Click Energy one of the most expensive online tariffs around. ]

The move will leave customers who signed up for the tariff on a very poor deal and will result in them having to pay an extra 12.5% more for their gas and 9.6% more for their electricity. Generally online tariffs are cheaper than standard tariffs as accounts are run solely on the internet and suppliers dont have the expense of sending out paper bills to customers. But British Gass Click Energy is more expensive than the standard tariffs of Scottish & Southern Energy, Scottish Power, EDF Energy and Powergen.

History of rising costs

Gas and electricity prices have been on the increase for the best part of the past two years with providers blaming an increase in the price of wholesale gas for the price hikes. According to experts, the average gas bill has jumped 75% since 2004 to a record £1,013 - a major blow for hard-pressed families who struggle to pay their bills.

However, the price of gas has recently plummeted, meaning domestic suppliers can buy it at a cheaper price. And although you might expect energy companies to pass these cost savings on to consumers, this is rarely the case. Experts reckon there are no imminent prices drops on the horizon and consumers can expect to pay a high price for energy and gas for the foreseeable future. The UK gas market continues to teeter on a knife edge. Forward prices for the winter are close to last year's levels and we are now even more reliant on foreign gas imports than ever before according to Mark Todd of energyhelpline.com. There are three things that could plunge us into further price rises in the New Year of 10-20%; a cold winter, problems in the global energy markets or national supply issues.

A ray of light

Today however (15 December), a ray of light has emerged from British Gas owners, Centrica. The firm has pledged to cut the retail price of gas in spring next year. It said that its full earnings for 2006 were on track to exceed those predicted by many financial analysts and, despite losing 6% of its customers over the course of the year, it would be be passing the benefit on to the consumer. However, one of the primary drivers behind the 'catch-up' in Centrica's profits - the warmest autumn on record in the UK - is another worry in itself.

15 December 2006 © Moneyextra.com

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